Liechtenstein's New Tax Law In Force


The government of the principality of Liechtenstein has announced the fact that since January 1 its new tax law – one of the most modern and attractive in the world – has been in force. According to the government, the new, competitive tax system fulfils current requirements for legislation that is both internationally compatible and in accordance with European law.

Liechtenstein’s new tax law provides crucially for a new flat-rate of tax of 12.5% for all companies, for the abolition of coupon and capital tax, as well as for the abolition of both inheritance and gift tax.

In a statement, Liechtenstein’s Prime Minister and Finance Minister Klaus Tschütscher emphasized the fact that the government had created a modern, attractive, competitive and efficient tax law, which is compatible with European law, and which also meets the demands of the 21st century. Consequently, Liechtenstein will be able to respond successfully to global tax competition, Tschütscher noted, adding that the principality had once again underlined its political credibility, its consistency and ability to reform and to strengthen itself in the ongoing drive towards globalization. The new tax law will at the same time also serve to significantly improve the attractiveness and stability of Liechtenstein’s financial centre, he added.

The government’s tax law reform will, the administration points out, serve to strengthen Liechtenstein’s position in terms of international competition, given that tax rates are one of the key factors in business location.

Drawn up in close collaboration with industry, the country’s new tax law is designed to provide companies located in Liechtenstein with legal, strategic and planning security, thus granting businesses better opportunities to structure themselves and to adapt to global competition.

Prime Minister Tschütscher highlighted the fact that the newly introduced 12.5% flat-rate of tax will ensure that in future all companies will be taxed equally. A single, and by international comparison, lower rate of tax is an attractive signal for companies both at home and abroad, he stressed, noting that the unequal treatment of foreign and own-capital has been removed with the introduction of the company own-capital interest deduction. Provisions on group taxation are also now included in the new law, Tschütscher continued, concluding that, as a result of the changes, as of January 1 it has become an even more attractive proposition to establish a new company in Liechtenstein.

Liechtenstein’s administration notes that the new law increases legal certainty, in particular for financial intermediaries in Liechtenstein and for their customers. It reveals that existing requirements regarding domiciliary and holding companies, which have in the past been criticized from the point of view of European law, have been removed under the new tax law. Consequently, Liechtenstein’s tax policy now complies fully with all European standards without having reduced the attractiveness of the principality as a location.

Commenting on the tax reform and the new law, Prime Minister Tschütscher stated that it has enabled Liechtenstein to take a big step towards a successful future and that it has served to dramatically strengthen the economic location and to underline the location advantages. The tax law sets new standards Europe-wide, Tschütscher emphasized.

Orientating its policies to tax laws in Luxembourg and Belgium, in a bid to support and to strengthen innovative industries, Liechtenstein’s government has specifically re-defined the taxation of income derived from intellectual property. Indeed, up to 80% of income will in future be exempt from taxation. The taxation of intellectual property rights represents a particular advantage for the many research companies operating in Liechtenstein.