Liechtenstein

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ABOUT LIECHTENSTEIN

Liechtenstein at a Glance

Liechtenstein is a German-speaking, 25km-long principality between Austria and Switzerland. It’s known for its medieval castles, alpine landscapes and villages linked by a network of trails. The capital, Vaduz, a cultural and financial center, is home to Kunstmuseum Liechtenstein, with galleries of modern and contemporary art. While widely recognized as a financial center, the largest contributor o Liechtensteins’s economy is its manufacturing sector for up to 40% of the gross domestic product.

 

Population: 38 111
Form of government: Unitary parliamentary constitutional monarchy
Official & spoken languages:  German
Currency: Swiss franc(CHF)
Time zone: CET (UTC+1) summer CEST (UTC+2)
GDP (PPP): $5.3 billion
GDP (PPP)/per capita: $98 432
Average salary: 8 144 CHF
Unemployment: 1,9 %
Major trading partners: Germany, Austria, Finland, Italy, China, Spain, Sweden, United Kingdom, United States

 

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Doing Business in Liechtenstein

Advantages of doing business in Liechtenstein

A Liechtenstein LLC is an excellent European holding company, because:

  • If suffers a maximum annual corporate tax of CHF 1,200. Holding company will not suffer tax on income from overseas operation, all forms of dividends and international property holdings.
  • Liechtenstein imposes no withholding tax on dividends, meaning, that foreign owners can use these companies as tax-neutral investment vehicles.

Properly structured Liechtenstein commercial IP-Company enjoys an effective corporate tax rate:

  • If IP is registered and protected in an international register, is IP-Company corporate tax rate 2.5 % on net profits from global income relating to patents, trademarks and designs.
  • Liechtenstein’s network of tax treaties can help to reduce the withholding tax imposed by third countries.

A Liechtenstein entity can be a commercial asset management company licensed by FMA and enjoy the following benefits:

  • A flat rate of annual corporation tax of 12,5% on net profits
  • Offer and provide its services throughout the EEA and EU thanks to the Markets in Financial Instruments Directive
  • The entity is free of capital gains tax and withholding tax
  • A Liechtenstein entity can receive investment income free of local tax, including dividends, royalties, and interest
  • There is a legal tax exemption on profits from foreign permanent establishments, rental income from foreign real estate, dividends and capital gains
  • An Asset Management Company is a legal entity that engages in portfolio management and or provides investment advice

 Disadvantages of doing business in Lichtenstein

  • All commercial entities in Liechtenstein require a resident director and a high minimum minimum paid up share capital of at least €30 000. Corporate directors are not allowed.
  • For all commercial Liechtenstein entities require permission to do business, making it difficult to start operations quickly
  • Compared to offshore tax haven jurisdictions, registering a Liechtenstein entity is expensive. Annual company costs range from €15 000 including Government license fees, accounting and tax fees, and paying for a local director
  • Liechtenstein has a very limited network of double taxation treaties. Consequently, minimizing global withholding tax may be a  challenge when extracting funds from subsidiaries located outside of Europe or receiving IP royalties from abroad.
  • Some Liechtenstein entities like Ansalt and Stifung may not be recognized by global banks, customer and suppliers. This problem exacerbated by the fact all of the entity’s legal documents are in German.

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Residence and Moving to Liechtenstein

Tax Resident in Liechtenstein

TAX RESIDENCY – INDIVIDUALS:

  • Tax Resident of Liechtenstein is individual that has Liechtenstein residency or Liechtenstein is center of his business and personal interest.
  • Tax Resident of Liechtenstein is individual that spends in Liechtenstein above 183 days during calendar year
  • Both income gained in Liechtenstein and worldwide tax will be subject to taxation.

TAX RESIDENCY – BUSINESS:

  • A company is considered to be tax resident in Liechtenstein if it has its legal seat or effective place of business in Liechtenstein.
  • Tax Resident of Liechtenstein is nonresident business that has its legal seat or effective place of business in Liechtenstein
  • Liechtenstein tax resident companies are taxed on their worldwide income.

Liechtenstein non-tax resident companies are taxed on income generated in Liechtenstein i.e. permanent establishment/branch income and immovable property located in Liechtenstein. 

Taxation in Liechtenstein

Corporate Taxes in Liechtenstein

Residence: A company that is registered in Liechtenstein or that has its management and control there is deemed to be resident for tax purposes

Basis: Resident companies are taxed on worldwide income, non-residents are taxed only on Liechtenstein-source income

Taxable income: Corporate income tax is levied on a company´s profit before tax, which consists of business/trading income, passive income and gapital gains. But an exemption is granted for dividend income and capital gains from participation’s,

Capital gainsCapital gains are treated as ordinary income ( and losses are deductible), regardless of the length of time the assets have been held.

Losses: Losses may be carried forward indefinitely and set off against taxable profits. The reduction in taxable income for a given year is limited to 70% of the profit before the utilization of tax loss carryforwards. Losses may not be carried back.

Foreign tax credit: No credit is granted for foreign tax paid ( except for nonrefundable withholding tax on interest and royalties under applicable tax treaties and in cases of reciprocity)

Participation exemption: Capital gains derived from the sale of a participation, as well as dividends from participation’s, are exempt. There is no minimum holding requirement.

Taxable income: 12,5%
Taxation of dividends: No
VAT registration: Enterprises whose annual turnover exceeds CHF 100 000, must register for VAT purpose
– VAT Rates: The standard rate of VAT is 7,7%.
Surtax: No
Alternative minimum tax: A minimum tax of CHF 1800 applies( except for small businesses)
Withholding tax (general): No
– From Dividends  No
– From Royalties No
– From Interests No
Transfer tax: The transfer of securities by security dealers is subject to a 0,15% tax on Swiss and Liechtenstein securities, and a 0,3% rate on foreign securities
Capital gains tax: Liechtenstein levies a separate capital gains tax on the sale of real property situated in Liechtenstein, but no tax is levied on personal capital gains from movable property that is not considered a business asset.
Real property tax: None, but the sale of shares in a Liechtenstein real estate company is subject to real estate capital gains tax.
Social security: The employer generally is required to pay slightly more than 50% of the employee´s social security and pension fund contributions.
Payroll tax: The employer is required to withhold wage tax on a monthly basis from an employee´s income and remit it to the tax authorities.
Stamp duty: Liechtenstein is considered part of the Switzerland for stamp tax purposes. The Swiss stamp duty of 1% is levied.
Capital duty: No
Tax treaties: Liechtenstein has concluded 19 tax treaties. Liechtenstein and Switzerland recently concluded a new tax treaty that became effective on 1 January 2017. Liechtenstein signed the OECD MLI on 7 June 2017
Anti-avoidance rules:
– Transfer pricing Liechtenstein does not have any formal transfer pricing legislation or documentation requirements. Altough all related-party transactions with Liechtenstein entities mus be carried out on arm´s lenght terms. In General Liechtenstein follows the OECD transfer pricing guidelines.
– Thin capitalization rule No
– Disclosure requirements No

Compliance for corporation:

Tax year: Accounting year

Consolidated returns: Companies within a tax group may opt for group taxation.

Filling requirements: Every company needs to submit an annual tax return by 1 July of the following tax year.

Penalties: Penalties apply for late filling or failure to file

Rulings: Advance rulings may be requested from the tax authorities to obtain certainty on the domestic tax consequences arising from a contemplated transaction.

Tax authorities: National Tax Administration

Personal Taxation in Liechtenstein

Personal taxation basis:

Residents individuals are taxed on their worldwide income: nonresidents are taxed only on Liechtenstein-source income.

Tax Residence:

An individual is resident if he/she is in Liechtenstein for 183 days or more in a calendar year or if his/her principle place of residence or the center of economic interests is in Belgium.

Filling status:

A married couple is assessed jointly, although the couple file an application for separate assessment.

Income tax rates in Liechtenstein:

Income tax applies to all income derived from compensation for work performed and to income from capital, calculated as a notional income of 4% of net wealth

Social security payments in Liechtenstein:

Old age and disability insurance is mandatory for all employees. The total employee contribution is divided between the employer and the employee.

Inheritance/estate tax in Liechtenstein:

No

Net wealth/net worth tax in Liechtenstein:

Net wealth is multiplied by 4% to calculate the notional income from wealth.

Tax year:

Calendar year

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OUR OFFERS IN LIECHTENSTEIN

  • business planning, tax consulting by Novasigma
    BUSINESS CONSULTING FROM 125€/h
  • TAX PLANNING FOR PRIVATE PERSONS FROM 850€
  • TAX CONSULTING FOR CORPORATIONS FROM 2.490€

 

NOVASIGMA IN LIECHTENSTEIN

 

Consulting & Advisory services

Consulting & Advisory services

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Incorporation, Administration & Business services in Liechtenstein

Incorporation services in Liechtenstein

Company administration in Liechtenstein

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Additional business services in Liechtenstein (by Novasigma Certified Partners)

Accounting and Bookkeeping services in Liechtenstein


Some of the common domestic Accounting and Bookkeeping services we provide in Liechtenstein include

  • Bookkeeping and Accounting Package | from 600€/ year + 59€/h
    • Invoicing and payments
    • Annual accounts
    • Monthly Reconciliation
    • Monthly financial statements (including balance sheet and income statement)
    • Payroll services
    • Income and tax return
  • Management accounts | Ask for quotation

Value Added Tax (VAT)

Audit

  • Annual accounts in view of an annual audit and attend accounting audits | Ask for quotation

Legal services for Liechtenstein companies and business owners

Legal services in Liechtenstein for all Novasigma Clients including companies and their owners and directors

Novasigma has built in Liechtenstein team of lawyers, associates and legal advisers to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisers have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.

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Banking, Financial and Insurance services in Liechtenstein

Banking services in Liechtenstein

Financial services in Liechtenstein

NEWS AND BUSINESS OPPORTUNITIES IN LIECHTENSTEIN

  • Offshore bank account opening with Euro Pacific Bank
    Euro Pacific Bank- New USD Route available

Interested in Liechtenstein? Please leave us a message and we will come back to you shortly.

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    Tax Residencies & Citizenship programs

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