Question: Stiftung VS Verein VS others

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Asking for advice on a legal matter. A friend of mine and I are running a small open-source project, which is picking up a bit of steam. The project is completely no-profit, but we would like to be able to collect donations (for hosting services and for dev time) in a legal and transparent way, apply for grants or university collaborations, own the copyright of assets (logo, name, code, etc). We also have a few other projects in mind of the same type, mainly around security/privacy. Eventually, we can see this becoming a sort of part-time job, where both my friend and I work, say 20% of our time, to develop and manage these projects, paid by donations and other sources. What is the right legal entity for this?

A Gmbh is out of the question, we want this to be really a low-effort side thingy. A rapid search gave me two options: Stiftung (foundation) and Verein (association).

I like the Stiftung idea more (also because I know of similar projects, not based in Switzerland, which advertise themselves as “foundations”), but from what I understood, here in Switzerland the Stiftung is a heavyweight machine, needs >50k CHF of capital, lot of legal overhead, etc. In Italy it is different, foundations can be of “no-profit” type with less overhead.

The “Verein” alternative could work maybe, but it is not clear to me whether my friend and I can be assured to retain full control of its operations, as (again, if I understood correctly) for a Verein it is necessary to hold democratic elections for the president and managing roles (while a Stiftung is operated by its board, which can set its own governance rules).

An option could be to open a foundation in Italy (“fondazione no-profit”) but it would be a bit cumbersome, as both my friend and I are located in Switzerland, and at the very minimum we would not have the possibility to do any tax optimization (e.g. by donating to the project).

Anything else I didn’t think of?

Thanks in advance for any useful reply! ^^

2

Seek proper legal advise. None of what you are suggesting will fly.

1 Like
3

Mind explaining why?

4

A club is the easiest solution.

If you and your friend are the only club members, then a democratic election shouldn’t be a problem.

The core roles in a club often include a president, vice president, secretary, and treasurer.
In smaller, perhaps newer, or less formal clubs, it’s more common for individuals to take on multiple roles.
Ultimately, whether or not a club allows the same person to hold more than one position depends on its specific rules and bylaws. Many clubs will have provisions that address this issue, outlining whether or not roles can be combined.

Historical note: For a long time until 2020 KPMG was the only Big Four audit firm not registered as a UK private company, rather the coordinating entity was a Swiss club (verein).

5

I think you have to consider the following:

  • Any form of society will involve admin burden, at a minimum, accounting (which you may be able to do by yourselves)
  • You mention tax optimization by you donating. To create something that is tax-exempt, you need a lot more regulatory approvals and will limit what you can do.
  • If you think that Gmbh has too complicated admin, you may have to reconsider the whole thing.
  • In the end, note that you can always receive donations in a personal capacity (cantons have tax-free limits, eg 10,000 per year, sometimes more, so if it’s two of you, that is 20k per year in donations, probably more that what you expect to get). This has the advantage of being free to use the money as you wish, eg pay servers or pay your time.
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Club as in, Verein? Ah, I see, you mean, make a Verein but make the membership a closed circle. That might work. Just to be clear: the tax optimization part is very, very secondary to the goal of the project, it’s fine to not consider it at all.

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There’s the rub, you need three people to found a club. And there’s no guarantee that OP will retain ownership once it has been transferred to the club (technically, not really possible IIRC. Instead the club would be granted a license).

A Stiftung can be gemeinnützig (non-profit), in which case can be tax-exempt. But there’s considerable overhead involved, and it’s not clear what use it would be in the first place as there would be some form of reimbursement to OP for the time investment, effectively a salary and that is where taxman hits.

Overall I see no use in creating a dedicated entity beyond what OP and friend already have. It’s a einfache Gesellschaft; what the two definitely need is a written contract that governs the tasks and contributions.
See the linked PDF at the bottom