LIECHTENSTEIN

Taxes

Tax reform

As from 1st January 2011, a comprehensive tax reform has come into effect in Liechtenstein.
The only distinction still made is exclusively between

• companies which are commercially active

and

• companies which are not commercially active.

Tax Law no longer recognises domiciliary and holding companies.

 

Taxation of legal entities
(all foundations, establishments, limited liability companies, companies limited by shares and other legal forms of company)

TAXATION provided the companies ARE COMMERCIALLY ACTIVE:

• uniform income tax of effectively 12.5 %: 10.6 % (flat rate)

• Income tax with regard to incomes from intangible property right of 2.5 % effectively

• no tax on investment income

• no additional charge on distribution

• no coupon tax

• tax exemption of dividends, capital and liquidation gains with regard to participations

• interest deduction on equity capital of 4 %

• minimum income tax of CHF 1,200.00

• loss carry forward without a time limit

• group taxation for affiliated companies

TAXATION of companies which only MANAGE ASSETS and are NOT COMMERCIALLY ACTIVE (with PVS tax status)

The private assets structures (PVS) are exclusively subject to a minimum income tax of CHF 1,200.00.
Furthermore, no income taxes are levied.

PVS tax status

The PVS tax status is exclusively granted to companies which are not commercially active. Such companies are not “companies” in terms of the EEA aid scheme. Therefore, the new tax status does not violate the aid prohibition of the EEA Agreement and has explicitly been approved by EFTA.

According to the new Liechtenstein tax law from 23rd September 2010, companies with PVS tax status may mainly acquire, hold, administrate and sell assets. This activity is limited to the passive realisation of revenues from the assets and excludes any commercial trade.

Furthermore, the new tax law contains special regulations which prohibit companies with PVS status from levying asset management fees and similar charges. In addition, it is ensured that PVS companies, which hold shares in companies, do not exercise any influence on the management of these companies. Moreover, the owner of a PVS company cannot be a company, but must either be a natural person, a company with PVS tax status or an intermediary acting on the account of these two groups of people.

The Liechtenstein authorities will be strict with regard to the interpretation and application of the new tax regulations. In particular, they will carry out a detailed case-by-case assessment within the framework of the administrative procedure planned in order to ensure that no economic activity is performed.

Transitional regulations

As of 1st January 2011, a three-year transition period applies to all domiciliary and holding companies existing on 31st December 2010.
During this transition period, they are exclusively subject to an annual minimum income tax of CHF 1,200.00.

Prior to the abolition of the coupon tax, the old reserves which exist on 31st December 2010 are not affected. Within the first two years until 31st December 2012, the old reserves can be distributed and / or carried over with a low tax rate of 2 %. From 2013, the tax is again 4 % with regard to old reserves which have not been billed.

 

Value added tax

The general value added tax rate for deliveries of goods and services is 8.0 %.
A reduced value added tax rate of 3.8 % and / or 2.5% % is applied to certain convenience goods.

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