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Dissolution and liquidation

From the dissolution resolution to deletion from the commercial register: grounds, winding-up, ultimate beneficiaries and distribution of the remaining assets.

A private foundation does not end silently. Whether it is dissolved by resolution, by revocation of the founder or by court order, the winding-up follows clear rules of the PSG.

We accompany foundations through dissolution and liquidation: from the reason for dissolution and the liquidation of assets to the distribution to the ultimate beneficiaries and deletion from the commercial register.

Reasons for dissolution

The PSG lists specific reasons for dissolution: expiry of the foundation, revocation by the founder, unanimous resolution of the board with consent of the founder, insolvency, refusal of insolvency proceedings for lack of assets, court dissolution and specific failures of purpose.

The reason for dissolution determines the further procedure and often the tax treatment. It should always be recorded clearly and provably.

The liquidation process

On dissolution the foundation goes into liquidation. The board becomes liquidator, unless the declaration provides otherwise. Assets are realised, debts settled, ongoing contracts closed and the remaining amount is distributed to the ultimate beneficiaries.

The liquidation must be reported to the commercial register. Only after the completed liquidation and a blocking period may the foundation be deleted from the register.

  • Board typically as liquidator
  • Realisation of assets, settlement of debts and closure of contracts
  • Distribution to the ultimate beneficiaries under the foundation declaration
  • Blocking period and deletion from the commercial register at the end

Ultimate beneficiaries and tax

The ultimate beneficiaries are typically the founder in case of revocation, or beneficiaries or third parties named in the declaration. Distribution during liquidation is taxable and must be coordinated with the tax adviser in advance.

Where the ultimate beneficiary is not clearly identified, disputes arise. That should be prevented in the drafting of the declaration and clarified in good time before liquidation.

This overview reflects the Austrian legal position under the Private Foundation Act (PSG) and does not replace advice in the individual case. The specific circumstances of your foundation are always decisive.

Frequently asked questions

What clients often ask.

Can the board dissolve the foundation on its own? +
Only in narrow scenarios provided by the PSG, in particular where the founder is no longer alive and the requirements are met. Usually the consent of the founder is required or a specific statutory reason applies.
How long does the liquidation of a private foundation take? +
Depending on the size of the assets a few months to several years. Real estate, shareholdings or ongoing contracts extend the process considerably. Careful planning shortens it.
What happens if there is no ultimate beneficiary? +
If the declaration does not effectively determine the ultimate beneficiary, the residual assets can revert to the Republic of Austria in the absence of another rule. To avoid this outcome, the declaration should always contain a subsidiary rule.
Does the tax office get involved in the dissolution? +
Yes. The dissolution and the distribution to the ultimate beneficiaries are taxable events. The distribution is typically subject to capital gains tax; real estate and other special items follow their own rules. The tax adviser must be involved.
Related topics

This may also be relevant to you.

Formation and foundation deed

Setting up with a clear architecture: foundation deed, supplementary deed, governing bodies and asset endowment drafted so the foundation delivers what the founder intended.

Founder rights, amendment and revocation

Reserved founder rights secure influence: amending the foundation declaration, revoking the foundation and the limits where several founders are involved or rights have lapsed.

Beneficiaries and information rights

Beneficiaries have rights: information about the foundation, inspection of the foundation declaration and remedies when the board blocks or distributions stop.

Conflict in the foundation, a blocked board, information denied?

In foundation law, structure, deadlines and evidence decide. Call us directly or write to us, callback within one business day.

+43 662 6280000 kanzlei@brandauer-rechtsanwaelte.at Book an initial consultation (72 euros)

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BRANDAUER Rechtsanwälte GmbH Giselakai 51 5020 Salzburg