Consumption Foundation

Basically, a foundation is designed to, eternal to exist. There are therefore foundations that are already many hundreds of years old. The purposes of a foundation are typically only from the Income of the foundation's assets.

Recently, however, the foundation laws of the Länder have also become so-called "foundations". Consumable foundations open. These are foundations that not only out of their earnings, but over the years they have also consume their own capital. The result: After a certain lifespan, a consumption foundation is dissolved again for lack of assets.

What forms of consumption foundation are there?

The consumption foundation is characterised by the fact that - unlike the "normal" foundation - it uses its assets completely, i.e. it consumes its asset pool.  and distribute it. A general distinction is made between two types of consumption foundation:

• Temporary Consumption foundation: This foundation is only established for a certain period of time, within which it has to use all its assets for the foundation's purpose (temporary foundation).
• Earmarked Consumption foundation: This foundation ends when it becomes impossible to fulfil its purpose.

Both forms must consume their assets within their lifetime. It also applies to both that they have a life span of At least ten years should have.

How does a consumption foundation spend its funds?

A consumption foundation must specify in the articles of association how it consumes its funds. This can be done either by specifying up to which exact Time the funds must be used up (e.g. 01.01.2027). In this case, the consumption can be varied annually. Alternatively, it can also be specified that annually a certain amount or a percentage of the funds must be used for the purposes of the Foundation.

How exactly does a consumption foundation end?

As a rule, a consumption foundation does not end "by itself". In fact, a foundation can only be dissolved by the passage of time if the foundation supervisory authority also notes this accordingly in the certificate of recognition. Otherwise, the dissolution of the foundation must be applied for at the foundation supervisory authority. In doing so, the organs of the foundation (usually the board of directors) must provide the supervisory authority with all the necessary information.

For whom/what is the Consumption Foundation suitable?

A consumption foundation is suitable, for example, for someone who needs a temporary specific purpose would like to pursue.

Whether such a consumption foundation is desired, in which federal state this type of foundation should have its seat and which tax consequences arise for consumption foundations and the founder is a question of the individual case.

We would be happy to advise you in detail and without obligation in cooperation with our lawyers for foundation law on the possibilities of the consumption foundation.