In Liechtenstein, a comprehensive tax reform came into effect on January 1st, 2011.
Only the following distinction is still made:
- companies which are commercially active; and
- companies which are not commercially active.
Liechtenstein's new tax law no longer recognises Domiciliary and Holding Companies.
The Taxation of Legal Persons
(All Foundations; Establishments; Limited Liability Companies (LLC., Ltd.); Public Limited Companies (PLC., Corp) and other legal forms of company).
- A uniform, single corporate income tax rate of 12.5% which is an effective rate of 10.6%;
- An effective corporate income tax rate of 2.5% on income from intellectual property rights;
- No capital tax;
- No distribution surcharge;
- The exemption from tax of dividends, capital gains- and gains gained through liquidation from shareholdings;
- The interest deduction on equity capital of 4%;
- The minimum corporate income tax payment of 1,800 CHF;
- The carrying forward of losses - no time-limit applies; and
- The group taxation of affiliated companies.
Private Asset Structures (PAS) are required only to pay the minimum of 1,800 CHF in corporate income tax.
No further corporate income tax requires to be paid.
PAS Tax Status
The PAS tax status is granted only to companies that are not commercially active. Such companies are not "companies" in terms of the EEA aid scheme. The new tax status does not therefore violate the EEA agreement aid prohibition and has been explicitly approved by EFTA.
Liechtenstein's tax statute of September 23rd, 2010 mainly permits companies that have been granted the PAS tax status to acquire, hold, manage and sell assets. This activity is limited to the passive receipt of income from the assets and excludes any type of commercial activity.
The said statute further contains special provisions prohibiting companies that have been granted the PAS tax status from imposing asset management fees and similar charges. Moreover, it ensures that companies that have been granted the PAS tax status which hold shares in other companies do not exercise any influence over the management of these companies. In addition, the owner of a company that has been granted PAS tax status is not permitted to be a company: the owner must either be a natural person, a company with the PAS tax status or an intermediary acting on behalf of the afore-mentioned persons.
Liechtenstein's authorities will interpret and apply the new tax regulations strictly. In particular, the authorities will undertake a detailed case-by-case assessment within the new administrative procedure to ensure that no commercial activities are being carried on.
Beginning on and from January 1st, 2011, a three-year transition period applies to all Domiciliary and Holding Companies that were in existence on 31st December, 2010.
During the said transition period, the qualifying companies are only required to pay the minimum corporate income tax payment of 1,200 CHF each year.
Old reserves which were in existence on 31st December, 2010, are not affected by the abolition of the coupon tax. Within the first two years of the transitional period, the said reserves were able to be distributed or carried over at a lower tax rate of 2%. From 2013, the old reserves which have not been cleared are once again subject to a tax rate of 4%.
Value-added Tax (VAT)
The general rate of value-added tax (VAT) on the provision of goods and services is 8%.
The reduced rates of VAT of 3.8% and 2.5% are applicable to the provision of certain products essential for day-to-day living.
The Taxation of Natural Persons
Changes due to the reform:
- Abolition of inheritance tax
- Abolition of the estate tax
- Abolition of the gift tax
- Abolition of the capital gains tax
- No asset tax for non-residents