Liechtenstein

In Liechtenstein, the legal forms of companies are distinguished through the following division: companies which are commercially active and companies which are not. There is no longer a distinction made between a Holding company and a company domiciled in Liechtenstein.

Liechtenstein Foundation (family Foundation):
Company Formation/Incorporation/Setting up

The Foundation is the most common company form used in Liechtenstein. Its assets are designated for a specific purpose and are separate from the assets of the founder. The Foundation has its own legal personality (legal person). The Foundation is best suited to the management of assets and as a means of securing a long-term and ordered succession. The Foundation is only suited to the carrying on of commercial activities to a limited extent.

Liechtenstein Establishment: Company Formation/Incorporation/Setting up

The Establishment, or Anstalt, is private law company form unique to Liechtenstein. It is legally autonomous and may be used for the carrying on of permanent commercial or other purposes. Indeed, the Establishment may be formed for the carrying on of a range of activities. Its independent legal form is to be distinguished from the public law establishments of other jurisdictions. It is particularly suited to the carrying on of trading and commercial activities, as an Asset Management Company or as a Holding Company. Its purpose is to be specified in the Articles of Association and the said purpose may be of a commercial or non-commercial type.

Liechtenstein Public Limited Company (PLC., Corp.): Company Formation/Incorporation/ Setting up

The Public Limited Company (PLC., Corp.) in Liechtenstein largely conforms to the legal form of Public Limited Companies (PLC., Corp.) in the jurisdictions of other countries on mainland Europe. It has its own legal personality, its capital is divided into shares and the said shares may be issued as bearer shares as well as registered shares. The Public Limited Company in Liechtenstein (PLC., Corp.) is well suited to the carrying on of all commercial activities, particularly to the carrying on of international trading or commercial activities. It is also suited to being a holding organisation for subsidiary companies or as an asset management company.

Liechtenstein Limited Liability Company (LLC., Ltd.):
Company Formation/Incorporation/Setting up

The Limited Liability Company in Liechtenstein (LLC., Ltd.) is formed by two or more persons, namely companies or private or public law entities, who join together for a defined purpose. The minimum amount of its nominal capital requires to be 30,000 CHF. The liability of each shareholder is thus limited to a certain amount. The initial contribution of each shareholder must amount to at least 50 CHF and may not be reclaimed.

 

Liechtenstein Trust:
Company Formation/Incorporation/Setting up

The Trust in Liechtenstein descends from Trusts in the Anglo-Saxon legal tradition. This legal instrument can be used in a similar way to the Foundation. Notwithstanding this, the Trust is able to be more freely structured due to there being no restrictions on its purpose - unlike in Foundation law. 

The Trust settlor transfers moveable or immoveable property or a legal right to to the trustees. The trustees, who upon the said transfer become the legal owners of the trust property, are obligated to hold and use the Trust property against all others for the benefit of one or more third-party (the beneficiary or beneficiaries).

Unlike the Foundation, the Trust is not a legal person. Instead, its legal nature is contractual.

a) Language

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

b) Purpose/Object

The purpose may be commercial or non-commercial insofar as the said purpose is not illegal. This may be, for example, the trading of goods; the acquisition of investments; financing; the management of real estate; the exploitation of patents; leasing; asset managed for specific beneficiaries or purely charitable purposes. However, banking operations are only permitted to be carried on by banks and asset management for third-parties is only permitted to be undertaken by licensed trustees in Liechtenstein.

c) Formation

The parties involved are:
- The settlor (founder) who must produce the Trust deed, which is the foundational deed, in writing;
- The trustee(s) whose acceptance of the position must be produced in writing;
- The beneficiary (or beneficiaries).

d) Existence

In practice, a Trust officially comes into existence when the agreement (trust deed) between the settlor (founder) and the trustee(s) is signed or by means of a trust letter. The optional entry in the Public Register, the alternative to the lodging of the Trust deed with the District Court, has no constitutive effect: the Trust exists as soon as the Trust deed has been signed.

e) Registration or Lodging of the Trust Deed

If it is wished that the Trust be registered in the Public Register, the following information must be provided: the date of formation; a description of the trust; the duration of the trust (this may be indefinite); the name and address of the trustee(s) (the name and address of the beneficiary(ies) or settlor is not required).

An alternative to the registration of the Trust in the Public Register is the lodging of the Trust deed with the Public Register Office. Where the Trust is so lodged, the Trust is not listed on any Register and only a person who is able to prove that they have a legitimate interest is able to inspect the trust deed.

f) Trust Property

There is no stipulated minimum amount of trust property.

g) Administrative Body

The trustee(s) is responsible for the management of the Trust. The trustee(s) manages the assets in his own name and is personally responsible therefor. The said management is to be for the benefit of the beneficiary or beneficiaries.

At least one trustee must have his law office address in Liechtenstein and must possess certain qualifications. In the case of a Trust, the Liechtenstein trustee may be a legal person.

In addition to the Liechtenstein trustee, natural or legal persons domiciled in Liechtenstein or abroad may be made trustees.

h) Supervisory Bodies

An auditor, protector (advisory board), a curator or a collator may be appointed to ensure that the provisions in the Trust deed are adhered to.

i) Legal Representation

The law does not require a Trust in Liechtenstein to have legal representation.

j) Beneficiaries

In a Trust, the settlor (founder) or a body specified in the trust deed determines who the beneficiaries are who are to be entitled to the trust property. In addition to the provisions on the beneficial interest in the Trust deed, the extent of and the conditions attached to the beneficial interest are specified there or in the resolutions of the Trust. The resolutions, which form an integral part of the Trust deed and which frequently take precedence over the Trust deed, do not required to be lodged with the Public Register Office. The said resolutions may be revocable or irrevocable and able to be amended or not able to be amended. In addition to amendments to the resolutions being permitted, it is possible that after a specified event or date (for example, the death of the settlor) that the resolutions that were previously able to be amended become irreversible and thus not subject to amendment. In general, the implementing authorities must adhere to the founder's (settlor's) wishes. Where no beneficiaries have been specified, it is to be presumed that the founder (settlor) himself is the beneficiary. If that is the case, the rules of intestate succession apply. Under certain circumstances specified by law or the Trust deed, the beneficial interest may be exempt from attachment by a creditor(s).

k) Bookkeeping

There are no bookkeeping requirements for a Trust.

l) Time required for Formation

Formation normally takes place within one week.

m) Powers of Attorney

Powers of attorney can be granted if, upon the instruction of the administrative body, transactions are to be handled by third parties. The holder of a power of attorney must report to the administrative body. As a general rule, only time-limited special powers of attorney will be granted due to the liability of the administrative body.

n) Liquidation

Trusts can be extinguished within a matter of days and may only be extinguished following the completion of the liquidation process.

o) Fees and Taxes

In Liechtenstein, the special endowment of assets without legal personality (Trusta) are neither taxed nor are they required to pay the corporate income tax paid by legal persons. A corporate income tax lump sum payment of 1,200 CHF requires to be paid if a Trust's registered office or place of central management and control is in Liechtenstein or if the Trust generates income in Liechtenstein.

p) Foreign Law

In Liechtenstein, Trusts may be formed in accordance with the law of another jurisdiction. Notwithstanding this, Liechtenstein law is applicable vis-à-vis third parties.

q) The Drawing up of a Balance Sheet

The drawing up of a balance sheet is not mandatory. Similarly, it is not mandatory that an auditor be appointed or that the balance be submitted. The trustee(s) must ensure that there is a strict separation between the trust assets and his personal assets. Under certain circumstances, an organised accounting is necessary therefor.

Liechtenstein Trust Enterprise (Trust reg.):
Company Formation/Incorporation/Setting up

The Trust Enterprise (Trust reg.) is a legal form unique to Liechtenstein. It is extremely flexible and the possible ways in which it may be structured are many. It may be structured similar to a corporation or a foundation. Depending its structure, a Trust Enterprise (Trust reg.),  may be formed for the carrying on of commercial activities or for asset management.

a)  Name

The name of a Trust Enterprise (Trust reg.) may be in any language (in Latin or German characters). Made-up names may also be used. The company name is protected (exclusivity of the registered company). The use of domestic and international state and place names in the company name are only permitted with special permission.

b) Language

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

c) Purpose

The purpose may be commercial or non-commercial insofar as the said purpose is not illegal. This may be, for example, the trading of goods; the acquisition of investments; financing; the management of real estate;

the exploitation of patents; leasing; asset managed for specific beneficiaries or purely charitable purposes. However, banking operations are only permitted to be carried on by banks and asset management for third-parties is only permitted to be undertaken by licensed trustees in Liechtenstein.

d) Nominal Capital (Trust fund)

The currency of the nominal capital may be specified in the articles of association as Swiss Francs, Euros or US. Dollars. Attention must be paid to the nominal capital required. A minimum of 30,000 Swiss Francs, or the equivalent sum in any other legal currency) must be contributed to its nominal capital. The nominal capital required for the formation of a Trust Enterprise (Trust reg.) may be in the form of a cash or non-cash contribution.  The trust fund may be segmented into shares which may or may not have the character of a security.

e) Formation

The Trust Enterprise (trust reg.) is formed through the submission of a foundation deed and articles of association to the competent authority. A minimum of one natural or legal person is sufficient therefor. As a general rule, formation proceeds on a fiduciary basis.

f) Creation

The Trust Enterprise (Trust reg.) officially comes into existence through its registration in the Public Register, namely the Commercial Register.

g) Governing Authority

The governing rights are usually held by the governing authority, namely the founder, and  are typically transferred by means of an assignment declaration (documentary evidence of ownership).

The property rights may also be transferred to persons other than the owner(s) of the founder's rights.

The management of the Trust Enterprise (Trust reg.) is undertaken by the trustee(s).

An auditor, as a third governing body, must be appointed if commercial activities are being carried on or if such activities are permitted by the articles of association. Furthermore, additional governing bodies are possible.

h) Administrative Body

At least one member of the administrative body, namely the board of trustees, must have his law office address in Liechtenstein and must possess certain qualifications. In addition thereto, any natural or legal person domiciled in or outwith Liechtenstein may be made members of the board of trustees. The administrative body is the executive body of the company.

i) Appointment of an Auditor

An auditor must be appointed if a Trust Enterprise (Trust reg.) is carrying on commercial activities or if its articles of association permit such activities to be carried on. Those permitted to be appointed as auditors are as follows: trustees, trustee companies with the authorisation of the trustees, chartered accountants and auditing firms. 

j) Legal Representative

The legal representative is the official addressee and contact person of a Trust Enterprise (Trust reg.) for the authorities including, for example, the tax authority and the Public Register Office.

k) Beneficiaries

In a Trust Enterprise (Trust reg.), the founder or a body specified in the articles of association determines who the beneficiaries are who are to be entitled to its income and/or assets. In addition to the provisions on the beneficial interest in the articles of association, the extent of and the conditions attached to the beneficial interest are specified there or in the by-laws of the Trust Enterprise (Trust reg.). The by-laws, which form an integral part of the articles of association and which frequently take precedence over the articles of association, do not require to be lodged with the Public Register Office. The said by-laws may be revocable or irrevocable and are able to be amended or not able to be amended. In addition to amendments to the by-laws being permitted, it is possible that after a specified event or date (for example, the death of the founder) that the by-laws that were previously able to be amended become irreversible and thus not subject to amendment. In general, the executive bodies must adhere to the founder's wishes. Where no beneficiaries have been specified, it is to be presumed that the founder himself is the beneficiary. If that is the case, the rules of intestate succession apply. Under certain circumstances specified by law or the Trust deed, the beneficial interest may be exempt from attachment by a creditor(s).

l) Bookkeeping

It is a legal requirement that a Trust Enterprise (Trust reg.) keep books. This may be  done in any legal currency. Moreover, the said books may be recorded  in English, French, Italian, Spanish or Portuguese and may be kept in or outwith Liechtenstein. It may be the case that the annual accounts be required to be submitted to Liechtenstein's tax authority; where this is so, the annual accounts must be submitted together with, at least, a German translation thereof.

m) Declaration

A statement of assets and liabilities must be produced annually by those Trust Enterprises (Trust reg.) which are not undertaking commercial activities and whose articles of association do not permit the carrying on of commercial activities, namely by those Trust enterprises (Trust reg.) formed solely for the investment and management of assets or the holding of assets or other rights. Based on this, the Liechtenstein administrative body shall inform Liechtenstein's Public Register Office that a statement of assets and liabilities is available and that no commercial activities have been undertaken in the past year. The statement of assets and liabilities does not require to be submitted.

n) Time required for Formation

Formation normally takes place within one week.

o) Powers of Attorney

Powers of attorney can be granted if, upon the instruction of the administrative body, transactions are to be handled by third parties. The holder of a power of attorney must report to the administrative body. As a general rule, only time-limited special powers of attorney will be granted due to the liability of the administrative body.

p) Liquidation

At the earliest, a Trust Enterprise (Trust reg.) may be dissolved six months after the issuing of the third notice to the creditors. Dissolution may only take place following the completion of the liquidation process.

q) Fees and Taxes

r) Beneficiary

The legal presumption is that the founder of a Trust Enterprise (Trust reg.) is himself the beneficiary where it is not clear who is entitled to the economic benefit thereof.

s) Submission of Balance Sheet

The audited annual accounts must be submitted to Liechtenstein’s tax authority if commercial activities have been undertaken or if the articles of association permit such activities to be undertaken.