On a global level, the high net worth population is expanding, and the wealth of high net worth individuals (HNWI) is increasing rapidly. For various reasons, high net worth families and individuals are searching for vehicles to assist them in safeguarding and conveniently managing their wealth. Private foundations represent one useful avenue for achieving this end, and the use of private foundations has become increasingly popular in recent years, particularly in European countries. Many countries have laws which regulate private foundations and several are looking for adjusting or introducing legislation. In this article I have looked at different options for taxation of private foundations and analysed what would be the best approach from the game theory point of view. The article comes to a conclusion that at the Nash equilibrium countries give tax exemptions to private foundations established by non-residents. Also I analyse why countries should be interested in changing taxation, even the best approach seems to avoid collecting tax revenues from private foundations. I believe that service fees a country earns and taxes collected from these fees would be substantial enough to make necessary changes to legislation.
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