Overview of new cantonal practices on the remuneration of members of the board of foundation

In accordance with Cantonal practice on the conditions for tax exemption for legal entities, in particular foundations, it has until now been required that a member of the board of foundation may not be remunerated for his/her activity. This restriction on remuneration stems from the condition of "disinterestedness" required in order to qualify for tax exemption for public utility purposes. This situation contradicts the need for professionalism in the area of philanthropy. Futhermore, this voluntary obligation does not take into account the risk of civil liability for members of the foundation board. In response to numerous criticisms from umbrella organisations and academics, some Cantons have adapted their policy, making it possible to remunerate members of the board of an tax-exempted foundation.

Below is a brief overview of these changes:

Vaud practice from 29th January 2024

Volunteering will continue to be the rule where the commitment is less than 60 hours per year. However, a set of rules governing the reimbursement of expenses will be introduced to cover certain costs associated with the role of foundation board member. A lump sum of CHF 300 per meeting, up to a maximum of CHF 3’600 per year, may be claimed in lieu of actual reimbursement.

If the commitment exceeds 60 hours, an indemnity regulation must be submitted to the cantonal tax authorities. In this case, the allowances are treated as salary subject to the various social security charges. In particular, the amount of the allowance must be justified by full specifications, an explanation of the method of remuneration and the terms of payment.

Zurich practice from 1st February 2024

Recognising the importance of remuneration in enhancing professionalism in the management of foundations, the Canton allows the remuneration of foundation board members. Subject to approval by the competent authority, an amount that must be "adequate" is calculated on the basis of criteria relating to the foundation (size, expenses, complexity of the activity, etc.), the mandate (duration, function, degree of responsibility, etc.) and the person (experience, reputation, etc.).

Geneva practice from 2021

The Canton of Geneva updated its practice in 2021. It is now possible to reimburse actual expenses and pay attendance fees (CHF 65/hour or CHF 85/hour for the chair) to members of the foundation board. Lump-sum compensation is also possible, subject to approval by the competent authority.

Generally speaking, including for the Cantons mentioned above, the taxpayer always has the possibility of discussing with the various cantonal administrations in order to find a solution adapted to each case.
It is important to remember that, with the entry into force of the new law on SA on 1st January 2023, the foundation board must notify the supervisory body of all remuneration paid to its members. In theory, the foundations concerned have until 30th June 2024 to comply with this new reporting requirement.

RSM Switzerland SA can advise you on the various legal vehicles available for your philanthropic projects. There are also several legal forms, in particular the foundation or association, which offer an appropriate structure depending on the activity in question. We can help you draw up your articles of association, register your company in the Commercial Register and prepare an application for tax exemption.