The private foundation
For purposes of international tax and estate planning the private foundation has been introduced as a flexible variant of the long existing ‘common’ foundation which variant is comparable to a trust. The Dutch name is Stichting Particulier Fonds, abbreviated SPF.
As mentioned, the private foundation is a foundation but a specific and flexible form thereof. The private foundation is, like other foundations, a separate legal entity, with assets and liabilities in its own name. Furthermore, a private foundation neither has shareholders, members or the like. Beneficiaries do not have to be appointed if such appointment is not desired.
Therefore, the purpose of a private foundation may include the making of distributions to incorporators and or others, such as children or grandchildren of the founder, without serving a charitable or social purpose. Beneficiaries of such distributions can – but are not required to – be appointed/designated in the articles of association, and if such is done, either in very general or very specific terms.
Another major difference between common and private foundations is that the private foundation’s purpose may not be to conduct a business or enterprise for profit. Managing its assets (investments, equities etc), to act as a holding corporation, or to participate as a partner in a limited partnership, will however not be regarded as ‘conducting a business’. Under the provisions of Book 2 of the Civil Code, the foundation may and should invest its assets and may do so actively. There are no limits on the type of investments.
Incorporation of the private foundation
Like the common foundation, a private foundation is incorporated as such by deed executed before a civil law notary in Curaçao. As to the requirements on the contents of the articles of incorporation we refer to Formation of a foundation where this is described for the common foundation.