A foundation is generally defined as: “A Foundation is an independent self-governing legal entity, set up and registered or recorded by an official body within the jurisdiction of where it is set up, in order to hold an endowment provided by the Founder and/or others for a particular purpose for the benefit of Beneficiaries and which usually excludes the ability to engage directly in commercial operations.“
The Luxembourg Private Foundations is the management and the administration of an estate for the benefit of one or more beneficiaries or for the benefit of one or more goals, other than those reserved for non-profit foundations.
It is not prohibited to the Private Foundation to have incidental charitable and non-profit activities, but they should not be incorporated with a goal in mind reserved for non-profit foundations. Safeguarding a specific collection as part of a private wealth would fit the Private Foundation. Finally, it is not subject to the supervision of the Minister of Justice.
The Private Foundation is not a company, it is an orphan structure. This means, that although it is based on corporate law it has a corporate structure like a Société Anonyme but without shareholder. And unlike the SPF, which is clearly defined as a company, with shareholders. They both are created by a notary act and a publication in the official journal.
The Luxembourg Law foresees that Foundations can issue certificates of entitlement.
This provides beneficiaries with a clear title which represents an asset or a part of the estate of the Foundation.