Liechtenstein

  • Posted By : Admin
  • March 31, 2018
  • Tax havens
  • 0 Comments

Principality of Liechtenstein is a sovereign country that doesn’t belong to the European Union and bordered by Austria and Switzerland. It is a modern jurisdiction with very good international investment programs. Liechtenstein is an offshore jurisdiction specialized in inheritance planning through its famous private foundations. Banking services of Liechtenstein are considered the best and most expensive in the world.

General information

Capital
Vaduz
Official language
German, French, English
Area
160 km2
Form of government
Constitutional Principality
Currency
Swiss Franc (CHF)
UTC time zone
UTC + 1 / + 2
Legal system
Legislation based on Civil law


Taxes for non-residents in Liechtenstein

Liechtenstein maintains favorable tax laws for foreign investment in the country. Individuals and legal entities that do not reside in the country and whose incomes don´t not come from the territory of Liechtenstein are not obliged to pay tax. Investors who decide to register a company in Liechtenstein will enjoy a reduced tax rate of 12.5%. The obligatory taxes that a company in Liechtenstein will have to assume will be the corporate tax and VAT, there are no taxes for the repatriation of dividends, inheritances, donations and neither will it support any type of tax withholdings for subsequent years. Liechtenstein offers very simple solutions for tax savings as it has numerous tax treaties on double taxation.

Characteristics of Liechtenstein Companies

Types of companies
Limited company (AG), Limited liability company (Gesellschaft mit beschränkter Haftung), Limited liability company without shareholders (Anstalt), foundations, trusts.
Share capital
The minimum share capital for a Limited company (AG) - CHF 50,000 (at least 50% must be paid up when a company is registered). For Anstalt, Funds and Trusts - CHF 30,000.
Constitution time
15-20 days
Taxes
12.5% (annual minimum tax payment 1,200 CHF)
Directors
1 director minimum. For an Anstalt one of the directors has to be a Liechtenstein resident. The secretary is not required.
Shareholders
1 shareholder minimum. The shareholders can be individuals or companies with residence in any country.
Shares
Registered and Bearer.
Legal address
It is obligatory to have a legal address on the territory of the country. When the director of the company is a foreigner, a registered resident agent must be appointed, whose function will be to receive communications from governmental authorities and represent the company.
Privacy
All information on the personal data of the beneficiaries and directors is kept by the registered agent and is not subject to disclosure and submission to the state authorities. The use of nominee services in Liechtenstein is a common practice but they are excessively expensive.
Board meetings
Meetings of directors or shareholders are not mandatory and can be held anywhere in the world.
Accounting / annual audit
An annual report that shows changes in directors, titles, and legal address is required. The presentation of accounting records and audit is also required.

Financial system in Liechtenstein

Financial services
Banks in Liechtenstein are specialized in Forex and stock exchange investments. The client may request any type of financial services: checking accounts, savings accounts, credit cards, foreign currency accounts, stock exchange accounts, credits etc.
Limitations of cash payment
There are no limitations on cash payments nor there is exchange control. Banks in Liechtenstein can open accounts in numerous currencies Euros, US $, GBP, AUD, CAD, CNY, JPY.
Deposit guarantee
Liechtenstein banks cover total amount of client´s deposits.

Automatic information exchange in Liechtenstein

Liechtenstein has signed the automatic exchange of information treaty that has entered into force on January 1 of 2017 and it has also signed 48 bilateral agreements of automatic exchange of information.

The signatory countries of the agreement

Year 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Groelandia, Guernsey, Hungary , Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Holland, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Year 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Barein, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshal Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, San Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay and Vanuatu.


Automatic exchange of banking information agreement does not affect the fiscal status of the country, that is, Liechtenstein has programs to encourage foreign investment and considers that natural persons and companies not resident in Liechtenstein are not obliged to pay taxes or to submit any type of tax declaration. As we have mentioned before, the companies and the individuals residents in Cyprus would be the ones obliged to pay the tax. The treaty of automatic exchange of information is causing many problems between countries since it is NOT a treaty in which automatic information will be reported to each other or all to all, that is, each country will have to sign a bilateral information agreement automatically with another country. What does this mean? If, for example, Mexico is interested in exchanging information with Liechtenstein but Liechtenstein is not interested in reporting information to Mexico, there will be NO information exchange and clients privacy will be protected. Currently, 31.03.2018 Liechtenstein has signed 48 bilateral agreements on the automatic exchange of information, mainly with European Union countries. You can see the updated list of countries that have signed bilateral agreements to exchange information automatically with each other.

The bilateral agreements with Liechtenstein

Year 2017
Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Japan, Jersey, Korea, Latvia, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Monaco, Holland, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, United Kingdom.
Year 2018
No bilateral agreement has been signed for this year.


The countries most affected by the signature of the automatic exchange of information treaties are going to be the countries of high taxation and not the offshore jurisdictions. It is expected that high tax countries sign bilateral agreements with each other with the corresponding problem that these have: competition in investments, tax competition and abandonment of investments in other jurisdictions by countries with lower or no taxation allowing legal repatriation of them to the country of fiscal residence.

Using offshore jurisdictions what can be achieved is a reduction and postponement of tax payments. As a general rule high-tax countries force natural and legal persons to declare all the world's income. But what happens when you have an offshore company and you do not divide dividends or have gone bankrupt? For example, a person has a company and account in Liechtenstein, the company has generated annual benefits and the final beneficiary doesn’t want to repatriate them to his country of residence. So what happens? The answer is very simple: there will not be any kind of tax payment until the benefits obtained from Liechtenstein reach the territory of a tax residence of the final beneficiary. Therefore, if you are required to report benefits obtained from abroad, it is advisable to inform your tax agency so when you will be offered a tax advantage in your country of residence to repatriate them.

Advantages of Liechtenstein

Liechtenstein is one of the best offshore jurisdictions to invest for the following reasons:

  • Low tax rate comparing to other EU countries 12%
  • Legal security guaranteed by law.
  • Privacy. 
  • Jurisdiction specialized in asset protection and tax planning.
  • Good telecommunications infrastructure.
  • Little bureaucracy when it comes to registering Foundations and Companies
  • There is no restriction by nationality.
  • Excellent geographical location.
  • Economically stable financial center