German Double Foundations
What is a double foundation?
The term “double foundation” does not denote a singular foundation, but rather it signifies a construct made up of two foundations. This model is also known as the dual foundation model. In this arrangement, one of the foundations aims at charitable endeavors, reaping the benefits of tax breaks, while the other foundation is focused on providing for a specific family and is bound by regular taxation. Both foundations share rights over the same company.

Who is the dual foundation model designed for?
The double foundation model holds significant interest within the realm of business succession in Germany. Often, the dilemma arises when one wishes to transfer the management of the company to one's own progeny and provide them with the profits, while simultaneously harboring a desire to contribute to the welfare of the general public.
Establishing a single (business) foundation necessitates setting the purpose either for the benefit of the family or the general public. A family foundation is fully taxable, whereas a charitable foundation can only distribute up to a third of its profits to close relatives of the founder.
The working mechanism of a double foundation
The double foundation model separates the rights to the company's assets and decisions, which is usually organized as a corporation (predominantly a GmbH). The family foundation is endowed with the majority of voting rights, while the charitable foundation is the recipient of the majority of profits.
As the family foundation, being the majority shareholder of the company, appoints the managing directors or has the power to instruct them, the management of the company remains under the family's control. Conversely, the charitable foundation, through its majority share of the distribution, receives adequate funds to effectively pursue its tax-privileged purposes.
Benefits of the German double foundation model
Upon establishing a dual foundation, the following key advantages of the dual foundation model become apparent:
- Long-term preservation of the company against disintegration in the event of inheritance
- Protection of the company from personal liability risks and personal bankruptcy
- Participation of the family in business through foundation organs
- Financial provision for descendants without the risk of selling the company
- Promotion of the general welfare through funds channeled into the charitable foundation
- Tax exemption of business transfers and profits in the charitable foundation
- Favorable taxation of share profits in the family foundation
Our specialized lawyers for foundation law are readily available to assist you with comprehensive inquiries regarding the structuring of a double foundation.
Your attorney for double foundations in Germany
Are you considering establishing a dual foundation, or do you have general queries regarding the German double foundation model? Feel free to reach out to us anytime, we are here to assist!
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