Assets which were transferred to a Liechtenstein Foundation (“Stiftung”) by the deceased are still part of his estate if it was in his only discretion to dispose of these assets. Consequently, the formation of the foundation did not become legally effective for Inheritance and Gift Tax purposes (see also Federal Fiscal Court June 28, 2007 (II R 21/05)).
According to the Court it is not of relevance if the beneficiary cannot dispose of the foundation’s assets. Furthermore, the transfer of assets to a juridical person (e.g. the Liechtenstein Foundation) does not have to be taken into consideration if the Foundation’s main purpose is tax evasion.
For more details regarding transfers of assets to non-domestic foundations see Koeniger, The German Inheritance and Gift Tax, 2017, p. 15.