The Court of Justice of the European Communities (ECJ – EuGH) has confirmed in its judgement on 23 September 2003 that a Liechtenstein Foundation can be the owner of Liechtenstein real estate used for agricultural purposes. This case has special relevance as the ECJ had to decide if the Austrian restrictions on the acquisition of agricultural and real estate for forest exploitation [exploitation by the owner himself; domicile in Austria; approval by the relevant authority (here in Vorarlberg/Austria)] are to be judged within the art. 40 of the annex XII of the EEA-agreement (free move of capital) or not. The Court approved that the acquisition of agricultural real estate can be made dependent upon an approval. The approval can however not be denied based on the fact that the purchaser of the real estate is not exploiting the real estate by himself. According to art. 40 of the EEA-agreement any physical person or any company set up in the EEA can acquire participations and real estate in other EEA member states which also refers to the Liechtenstein Foundation. This case is of special interest for Liechtenstein as this confirms that Liechtenstein entities can be used in the EEA for the acquisition of participations and real estate and fully benefit from the EEA-treaty.

Together with the judgement of the ECJ from 5.11.2000 [C-208/00, Ueberseering BV/Nordic Construction Company Baumanagement GmbH (NCC)] the Liechtenstein entities have seen in the last view months a confirmation for their use in the international field. This judgement C-208/00 does not deal with the Liechtenstein Foundation, however might have enormous relevance as the Liechtenstein Foundation does normally not fulfill the prerequisites as "entrepreneur" in Liechtenstein (no office space; no staff employed by the Foundation itself; no production; only passive investment income), although the only foundation board is domiciled in Liechtenstein and therefore the decision-taking process is performed in Liechtenstein.

The ECJ confirmed that a country "B" cannot deny the legal personality and therefore the rights to be legal party if such a company is set up and registered in the EEA-country "A" but has all its members of the board of directors in the EEA-country "B". Such a behaviour would be against art. 43 EU and art. 48 EU. This judgement shows that countries which base their legislation and jurisdiction on the so-called "registration theory" (Sitztheorie) might have future problems also for tax purposes as the tax law normally is based on the civil law. Also so-called "base" companies (domiciliary companies) will benefit from this judgement, however any structure has to be carefully drafted in order the structure may not be considered as obvious abuse of legal formation rights.