On 1 January 2006 the Swiss Foundation Law was revised with the intention of increasing the joyfulness to establish foundations . Background of this revision was the belief that foundations could significantly support and relieve the state in many of its responsibilities and that with the liberalization of the Foundation Law the areas of culture, education, research, science and social welfare would benefit from additional funds . Accordingly, the main objective of revising the Foundation Law was to facilitate granting of funds . This was achieved through three legislative measures: Firstly, by the possibility that the purpose of a foundation may be changed under certain conditions , secondly, by improving the control of foundations and, thus, the creation of increased transparency through the introduction of a mandatory auditor and, thirdly, by increasing the tax deductibility of voluntary contributions to charitable institutions .

Before the revision of the Foundation Law, charitable institutions were already widespread in Switzerland. In accordance with estimations, in Switzerland over 8,000 classic foundations exist, which are committed to the public welfare . These are exempted from tax liability under certain conditions . The tax exemption for institutions, which pursue charitable purposes, however, is not limited to foundations. Other legal entities, in particular associations, may also be exempted from taxes.

This article starts with an overview of the Swiss tax system . Subsequently it is shown, under which conditions voluntary payments to charitable institutions are tax exempted . Then it is deepened examined, under which conditions charitable institutions are tax exempted . Finally, two possible forms of non-profit legal persons will be precisely looked at: the Foundation and the Association .