LIECHTENSTEIN

Legal forms of company

As a rule, Liechtenstein distinguishes between commercially operating enterprises and enterprises which have their legal seat in Liechtenstein, but which do not operate in the country.

Commercially operating companies

A commercially operating company is subject to domestic taxes of the principality of Liechtenstein. Each year, balance and income statements as well as an auditor’s report and a tax return must be submitted.

Non-operating companies ('holding' and 'domiciliary' company forms)

The qualifying factor for the special taxation of Liechtenstein’s holding and domiciliary companies is that they do not carry out any business activity within Liechtenstein itself. As a rule, the business activity of such companies takes place outside the country.

Holding companies

A holding company is a corporate body having its registered seat in Liechtenstein with the sole or main purpose administering or managing assets and investments.

Possible activities amongst others include:
- Capital investment of any kind
- Holding of investments (mother-function)
- Holding of intangible rights (patents and industrial property rights)
- Holding of real property (plots of Land or similar)

Domiciliary companies

A domiciliary company is a legal entity that has its registered seat in Liechtenstein, but carries on its commercial activities outside the country. Its purpose goes beyond the realm of administering or managing assets and investments.

Possible activities are consequently:
- Trade with goods of all kinds
- Exploitation of patents, licenses and other miscellaneous rights
- Supply of services of all kinds
- Mediation and counselling services of all kinds

In Liechtenstein, companies are distinguished according to their legal form.

Liechtenstein Foundation

The foundation is the most common form of a company established in Liechtenstein. Assets, with which the Foundation is endowed, become separate from the assets of the Founder, and are put to a specific purpose. The foundation created is a separate legal person. Foundations are best suited to the administration of assets and as a means of securing long-term, ordered succession. The foundation is not suitable for the pursuit of commercial objects.

More detailed about a Foundation

Liechtenstein Establishment

The Establishment, or Anstalt, is a corporate form particular to Liechtenstein. It is an autonomous fund with beneficiaries which can be used as an instrument for commercial objects or for the administration of assets. The Establishment, therefore, is suited to a wide range of circumstances. The articles make provision for a purpose/object that can be commercial, non-commercial, or both. Thus, the Establishment is often used as a holding company for patents or royalties, or for the assets of an estate.

More detailed about an Establishment

Liechtenstein ‘Aktiengesellschaft’ (Company Limited by Shares)

The AG in Liechtenstein largely conforms in its legal form with the AGs of most other countries of continental Europe. The capital is divided into shares. Bearer or registered shares are admissible; the minimum nominal value is not stipulated. The company limited by shares is suitable for all economic objects, in particular for active international commercial transactions, as a holding organization, or for subsidiary companies etc.

More detailed about a Company limited by shares

Liechtenstein ‘GmbH’ (Limited Liability Company)

The Limited Liability Company (GmbH) is formed by two or more members, with a minimum of SFr 30,000 at their disposal, who join together for any defined purpose. The minimum subscription amount from any one shareholder is SFr 50, and further amounts need not be paid unless stipulated in the Articles. The liability of each partner is therefore limited to this exact amount.

Trust settlement

The trust settlement is based on the Anglo-American model. This legal instrument can be used in a similar manner to the foundation, but there is more freedom of structure with the trust, as there are no similar restrictions of its purpose.

The settlor transfers real or personal property or rights (as trust property) to the trustee, who is obligated to hold or make use of this trust property against all others in his own name as an independent legal owner for the benefit of one or more third parties (beneficiaries).

In contrast to the foundation, a legal person is not created, but a form of contractual relationship is made.

a) Language

The official language is German. A translation of the German-language formation deed will be prepared upon request.

b) Purpose/Object

Banking business may only be pursued by banks, and the administration of assets for third parties may only be undertaken by licenced Liechtenstein trustees.

c) Formation

The persons required for the formation of the Trust are:
- The settler,
- The trustee(s),
- The beneficiary/beneficiaries.

The trust deed/deed of creation must be in writing, and the trustee must also accept the office in writing.

d) Creation

The trust comes into existence with the signing of the agreement (trust deed) by the settlor and the trustee or by means of a trust letter. The optional entry in the Public Register (instead of deposition) does not have a constitutive effect.

e) Registration or Deposition

If there is a desire to register the Trust in the Public Register the following information must be provided:
- Date of formation,
- Designation of the trust settlement,
- The duration of the Trust (may be indefinite),
- The name and address of the trustees

The names and addresses of the settlor and beneficiaries are not required.

As an alternative to registration, it is possible to deposit the trust deed with the Public Register Office. In this case, the Trust Settlement is not listed on any register and it is only possible to inspect the Trust Settlement when the person can prove their entitlement to do so.

f) Trust Property

There is no stipulated minimum amount of trust property.

g) Administration

It is the responsibility of the trustee to attend to the administration of the Trust. The trustee, in his/her own name, is personally responsible for the administration of the assets to the benefit of the beneficiaries. The address of the law office of at least one of the members of the administration must be in Liechtenstein, and he/she must possess certain professional qualifications.

In the case of a trust settlement, the Liechtenstein trustee may also be a legal/juridical person.

In addition to the trustee based in Liechtenstein, any number of natural or legal persons, residing/based in Liechtenstein or abroad, may also be made trustees.

h) Supervisory Bodies

In order to ensure the observance of the provisions in the trust deed, an auditor, a protector, a curator or a collator may be appointed.

i) Legal Representative

The Law does not prescribe a legal representative for trust settlements.

j) Beneficiaries

In a trust, the beneficiaries entitled to the yield and/or the assets are designated directly by the settlor or, having regard to the provisions in the articles, through another body. In addition to the entitlement to designate the beneficial interest, the settlor or the specified body also determine, through the articles and/or by-laws, the conditions and the extent of the beneficial interest.

As a rule, the by-laws form an integral part of the articles and frequently have priority over them, but they need not be deposited with the Public Register Office. The by-laws may be revocable or irrevocable, modifiable or unalterable. It is also possible for amendments to be admissible to start with and then, following the occurrence of a certain event (such as the death of the settlor), for the by-laws to be unalterable. Within certain limits, the implementing bodies must observe the settlor’s instructions. Where no beneficiaries have been designated it may be assumed that the founder is the beneficiary. In this case succession shall be by inheritance. When certain prerequisites are fulfilled (as determined by law and the articles) the beneficial interests shall be exempt from creditor’s attachment.

k) Accountancy

There are no accountancy requirements for a trust settlement.

l) Time required for Formation

Not more than one week is required to form a company.

m) Powers of Attorney

Powers of attorney may be conferred where, upon instruction of the administration, transactions are implemented by third parties. The holder of a power of attorney shall be under obligation to report to the administration. Due to the liability of the administration for the actions of the attorney it is usual to confer only specific powers of attorney limited with respect to time

n) Liquidation

Trust settlements may be deregistered in a few days. Without exception, the prerequisite for deregistration is the conclusion of liquidation.

o) Fees and Taxes

General note: In the case of companies organized in the legal form of domiciliary companies/holding enterprises, profits and asset growth are not subject to capital gains tax, or a tax on profits.

Assets which are transferred to the Trustee by persons residing abroad as well as distributions to beneficiaries residing abroad are not subject to tax in Liechtenstein.

Upon formation

- Stamp Duty/Formation Duty

In the case of a trust settlement no formation duty is to be charged.

- Registration or deposition Fees

A fee, dependent upon the capital involved and the legal form being registered, amounting to a minimum of approximately CHF 350-700 is due upon registration in the Public Register or (selective) deposition of formation documents, as provided by law.

Subsequent taxes

- The Special Corporation Tax (Capital Tax)

The Establishment is subject to the special corporation tax amounting to 0.1 % of the net assets, with a minimum fee of CHF 1000 per annum. This tax is payable in advance.

- Turnover Tax on Securities

In general, this amounts to 0.15% for domestic securities (Switzerland and Liechtenstein) and 0.3% for foreign securities. The banks and brokers are normally liable for settlement; so, too, are other persons, in so far as they professionally undertake the acquisition and sale of securities. In addition, investment companies, when fulfilling certain prerequisites, are deemed to be registered dealers in securities

- Value Added Tax (VAT)

Since January 1^st, 1995 the turnover tax (referred to as WUST) has been replaced by the value added tax (VAT). Liechtenstein holding companies and domiciliary enterprises are exempt from VAT provided they have no domestic turnover. ‘Domestic’ embraced the common Swiss/Liechtenstein economic area.
The VAT generally amounts to 7,6 %

The VAT is levied on:

* all domestic deliveries of goods and the provision of services;
* the importation of goods;
* goods consumed and services used domestically;
* services procured from abroad that amount to more than CHF 10,000 per annum.

For certain articles of daily use (e.g. food and beverage as well as cereals, medication, newspapers) a reduced rate of VAT is applied. At the present time this amounts to 2.4%.
Exports are exempt from VAT.

* Customs Duties
* Other Fees

Fees may also accrue from the certification of signatures, the procurement of official confirmations and extracts from the Commercial Register, the granting of permission to register or deposit, the appointment of a liquidator, etc.

p) Foreign Law

Trust settlements based upon foreign law may be formed in Liechtenstein. Liechtenstein law shall be applicable to third parties.

q) The Drawing Up of a Balance Sheet

There is no obligation to draw up a balance sheet, and there is no requirement to appoint an auditor. The trustee must keep his/her personal assets distinctly separate from the trust property, and in order to do this it is necessary to keep orderly books of account.

The Trust Enterprise

This extremely versatile legal form is particular to Liechtenstein. It is a flexible instrument that can be structured similarly to a corporation or a foundation. Depending upon the structure it takes, the Trust Enterprise may provide an instrument for commercial objects or for the administration of assets.

a) Name

The name can be freely chosen in any language (in Latin or German characters), and imaginative names are also admissible. After registration, the company name is protected (exclusiveness of the registered name). Special permission must be obtained if you are intending to use national and international state or place names in the company name.

b) Language

German is the official language. A translation of the German-language formation deed may be prepared upon request.

c) Purpose/Object

The purpose/object may provide for the pursuit of commercial or non-commercial activities in any legally admissible form, for example, the trade of goods, the acquisition of investments, financing, the administration of real estate, leasing, the administration of assets for certain beneficiaries or for purely charitable purposes. However, banking business may only be pursued by banks, and the administration of assets for third parties may only be undertaken by licenced Liechtenstein trustees.

d) Nominal Capital

The nominal capital, as determined in the articles, may be fixed in Swiss francs, euros or US dollars. Attention must be paid, however, to the minimum required capital. Upon formation the capital may be paid in cash or kind. The minimum capital must be CHF 30 000, or the equivalent value in any desired legal currency and may be divided into units of shares (with or without the character of securities).

e) Formation

The Trust Enterprise is formed by means of a formation deed and articles that must be submitted to the competent authorities. It may be formed by one natural or legal person. Generally, formation ensues on a fiduciary basis.

f) Creation

The trust enterprise under obligation to register first comes into existence upon entry in the Public Register (Commercial Register)

g) Governing Authority

The governing rights are usually held by the founder who then transfers these rights by means of an instrument of assignment (documentary evidence of ownership).

The property rights may also be assigned to persons other than the bearer(s) of the founder’s right.

The administration is undertaken by the board of trustees. In so far as commercial activities are undertaken, or the articles make provision for such activities, an audit authority must be appointed as a third governing body.

Further options for governing bodies may also be discussed.

h) Administrative Body

The address of the legal offices of at least one member of the administration (board of trustees) must be in Liechtenstein, and that person must possess certain professional qualifications. Any number of natural or legal persons residing in Liechtenstein or abroad may be made members of the board of trustees. The board is the Trust’s responsible body.

i) Auditor

If the Trust Enterprise engages in commercial activities, or the articles provide for such activities, then an auditor must be appointed. Trustees, trust companies with a trustee concession, auditors and chartered accountants are licensed to act as auditors.

j) Legal Representative

The legal representative is the official addressee of the Trust and the connecting link with the authorities, for instance, with the Tax Administration and the Public Register Office. The law does not prescribe a legal representative for trust settlements.

k) Beneficiaries

In the case of the Trust Enterprise the beneficiaries entitled to the yield and/or the assets are designated either directly by the settlor or, depending upon the provisions in the articles, by another body. In addition to the designating the entitlement to the beneficial interest, the settlor or specified body also determines the conditions and extent of the beneficial interest with reference to the articles or by laws.

The by-laws which, as a rule, form an integral part of the articles and frequently have priority over them, need not be deposited with the Public Register Office. They may be revocable or irrevocable, modifiable or unalterable. It is also possible for amendments to be admissible to start with and then, following the occurrence of a certain event (such as the death of the settlor), for the by-laws to be unalterable. Within certain limits the implementing bodies must observe the settlor’s instructions. Where no beneficiaries have been appointed it may be assumed that the founder personally is the beneficiary. In this case succession shall be by inheritance. If certain prerequisites determined by law and the articles are fulfilled, then the beneficial interests shall be exempt from creditor’s attachment.

l) Accountancy

It is a legal requirement that the Trust Enterprise keep books of account. The books of account may be kept in any desired, legal currency and also in the English, French, Italian, Spanish or Portuguese language. In certain circumstances the annual account must be submitted to the Liechtenstein Tax Administration office, in which case it must be accompanied by a German translation.

m) Declaration

Trust Enterprises that do not engage in commercial activities and whose purpose/object as laid down in the articles does not provide for the pursuit of such activities (those Enterprises created solely for the investment and administration of assets, or the holding of investments, or other rights) shall draw up a statement of assets and liabilities each year. Based on this, the Liechtenstein Administrative Body shall inform the Public Register Office that a statement of assets and liabilities is available and that in the preceding year commercial activities were not pursued (the statement of assets and liabilities must not be submitted).

n) Time required for Formation

Not more than one week is required for formation.

o) Powers of Attorney

p) Liquidation

The Trust Enterprise may not be dissolved until six months at the earliest after the third call to creditors. In all cases, the prerequisite for deregistration is the conclusion of liquidation.

q) Fees and Taxes

General note: In the case of companies organized in the legal form of domiciliary companies/holding enterprises, profits and asset growth are not subject to capital gains tax, or a tax on profits.

Assets which are transferred to the Trustee by persons residing abroad as well as distributions to beneficiaries residing abroad are not subject to tax in Liechtenstein.

For Trust Enterprises the special corporation tax (capital tax) amounting to 0.1% of the capital and visible reserves (with a minimum charge of CHF 1000) is payable annually.

Upon formation

- Stamp duty/formation duty

Upon the formation of a Trust Enterprise the stamp duty amounts to 1 % of the taxable capital which accrues to the company. This is payable if the capital exceeds 250.000 CHF. The same duty also becomes due when the capital is increased or when a change of hands takes place.

- Registration or deposition Fees

A fee dependent upon the capital involved and the legal form being registered, amounting to a minimum of approximately CHF 350-700 – is due upon registration in the Public Register.

Subsequent taxes

- The Special Corporation Tax (Capital Tax)

The Trust Enterprise is subject to the special capital tax amounting to 0.1% of the net assets, with a minimum fee of CHF 1,000 per annum. This tax is payable in advance.

- Turnover Tax on Securities

This generally amounts to 0.15% for domestic securities (Switzerland and Liechtenstein) and 0.3% for foreign securities. The banks and brokers are normally liable for settlement; so, too, are other persons, in so far as they professionally undertake the acquisition and sale of securities. In addition, investment companies, when fulfilling certain prerequisites, are deemed to be registered dealers in securities.

- Value Added Tax (VAT)

The VAT is levied on:

* Customs Duties
* Other Fees

r) Beneficiary

In cases where the individual/s entitled to the economic benefit of the Trust are not determined, it is assumed that the Settlor, personally, is the beneficiary.

s) Submission of Balance Sheet

If commercial activities are undertaken, or it is possible according to the artices that such activities may be undertaken, then an audited annual account must be submitted to the Liechtenstein Tax Administration Office.