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Liechtenstein has NO double
taxation agreement with most countries; EU freedom of establishment is
NOT applicable, therefore offshore status. For these reasons, there is
the risk of assumption of organisation misuse. This assumption may be
avoided by installing a commercially equipped business operation in
Liechtenstein (a fully equipped office, and at least one employee),
and by actively transacting business in Liechtenstein.
Fees for complete packages (full service)
The following services are included in our complete packages:
Forming of the company, entry in the commercial register of the
country, apostille, notarially certified translations of certificates
into English, unless official language
An attorney in the formation country will act as nominee director of
the company (to the outside) and transfers all rights and
obligations internally to the actual beneficiary (notarial deed of
trust). The director does not have any account authority.
a tax office in the formation country will act as nominee
shareholder (to the outside) of the company and transfers all rights
and obligations internally to the actual beneficiary (notarial deed
Domicile of the company in the formation country:
deliverable postal address, availability by telephone, telephone and
fax, mail forwarding service
bank account for the company at a renowned major bank in the
formation country, internet banking, VisaCard and cheques. Only the
founder of the company is authorized to have access to the account.
General power of attorney to the founder:
Only the founder receives a notarially certified general power of
attorney for the company.
Recommendation of a renowned tax office
in the formation country, for book-keeping
Internet-homepage of the company
hosted on a server in the formation country: 5 pages for
presentation of services/products, feedback form, imprint, e-mail
address. May be extended at any time.
corporate bodies are formed under the Law on Persons and Companies
1926, known as the PGR Code. Trust Enterprises are formed under the
Law Concerning the Trust Enterprise 1928. A wide variety of types of
entity can be formed under the PGR Code, the most commonly used of
which are described below; other possible forms include the limited
partnership with a share capital, the company limited by quota shares,
the association, the cooperative association and the company without
juridical personality; but they are not commonly met with in offshore
corporate forms that are allowed under the Code, and the Trust
Enterprise, can additionally be either 'holding' companies (companies
that hold investments) or 'domiciliary' companies (not having trading
activities inside Liechtenstein). Holding, domiciliary and
non-resident entities are sometimes known as 'exempt', ie exempt from
certain types of taxation.
permits or licenses are required to do business, except for financial
sector companies and professional services (see
Business Sectors). It is a notable feature of the Liechtenstein
PGR Code that there is very great freedom, within the basic forms it
describes, to constitute corporate and share structures in a flexible
way according to the particular purpose of the entity and its
originators' wishes. Therefore only rather general statements can be
made about the rules governing the operation of the various forms; the
rest will depend on circumstances.
formed under the PGR Code (not Trusts) share a number of
- there must
be written Articles of Association; they are deposited with the
Registrar and are available on the public file, including details
of capitalisation, share structure, registered office, etc;
corporate body does not come into existence until its details have
been entered into the public register;
- the names
of the directors, officers and shareholders are kept at the
corporate name can be in any language and must include the name of
the type of body concerned (Limited, Foundation, etc), but some
words are not permitted, mostly those with national or
international territorial meanings (exemptions may be available);
Company Limited by Shares
Company Limited by Shares is designed to be used as a public company,
although it does not have to be public. There are founders who are (can
be) distinct from the shareholders.
Company Limited by Shares has a minimum capital of SFr 50,000, 20% of
which must be paid up, with a minimum paid up of SFr 50,000. Bearer
shares must be fully paid up, although the Articles can permit them to
be 50% paid up; the minimum is still SFr 50,000.
there is to be no public subscription, the company is formed 'simultaneously',
in one legal act, and the founders are the shareholders. They create
the company by entering into a Deed.
there is to be a public subscription, the company is formed 'successively':
first, the founders declare their intentions in general, then the
subscription process takes places, and in a general meeting of
subscribers (shareholders) the final details of the company's
constitution are ratified.
Shares can have variable voting rights (eg multiple votes, or
restricted votes), but non-voting shares are not permitted. The
appointment of an auditor, and the annual submission of audited
accounts to the Registrar, are mandatory for the Company Limited by
Limited Liability Company
Limited Liability Company (Aktiengesellschaft) is formed by two or
more members and has a minimum capital of SFr 30,000. The minimum
subscription amount from any one shareholder is SFr 50. Further
amounts need not be paid up unless the Articles provide for it; but
the joint liability of the shareholders on liquidation or withdrawal
is the amount of the registered capital.
types of share can be issued, including preference, registered,
voting, no-par-value and bearer shares; only registered shares can
be issued at below par value;
rights can be allocated or not freely to all types of shares, and
voting rights can be limited according to defined circumstances or
- a minimum
of one director is required, who may be corporate; secretaries are
not required; an exempt company needs to have a local professional
as an agent;
annual accounts have to be filed.
The Establishment (Anstalt)
Establishment, or Anstalt, is a corporate form that is peculiar to
Liechtenstein. It has no members or shareholders. It is an autonomous
fund with beneficiaries. It is often used as a holding company for
patents or royalties, or for estate assets. It has a founder or
founders, who are not necessarily the same as the beneficiaries; the
founders' rights can be transferred, if the capital is not divided
into shares, giving the current tenants of the founders' rights
considerable powers over the Establishment. In this respect, the
Establishment is similar to the Foundation.
- The minimum
capital, if not divided into shares, is SFr 30,000; and if higher,
at least half (minimum SFr 30,000) must be paid up;
- the minimum
capital, if divided into shares, is SFr 50,000 (but this form is
never nowadays used);
- a minimum
of one director is required; it is normal to delegate substantial
powers of management to the director(s);
- if the
Establishment has commercial objects, audited annual accounts must
be filed; but note that the management of investments or other
assets is not deemed 'commercial'
The Foundation (Stiftung)
foundation exists to give effect to the stated, non-commercial wishes
of its founder, as set out in a foundation deed and the Articles of
Association (Statutes). In effect, the assets with which the
foundation is endowed become a separate legal entity. The Foundation
has no members or shares; it is set up by a founder (or founders).
Most often, this is the form that is used for the continuation of
family assets. The Foundation has beneficiaries, who may be identified
in a variety of ways.
- No public
registration is necessary, except that a copy of the Foundation
Deed is lodged with the authorities. It need contain only very
general statements about the purpose of the Foundation, while
detailed rules are set out in private bye laws.
rights are transferable, and they normally include the right to
terminate the Foundation or amend the bye laws.
activities are not permitted except in so far as they are in
pursuit of the Foundation's non-commercial goals. The minimum
assets of a Foundation are SFr 30,000, which can not be divided
into shares; the assets do not necessarily have to pass to the
Foundation on formation;
Foundation is normally administered by what amounts to a board of
The Trust Enterprise
Trust Enterprise is set up by a Trustor (settlor) through a Deed of
Trust which is equivalent to Articles of Association, and must specify
the name and purposes of the Enterprise, the identity of the trustees,
the composition of the trust fund, and (if the purposes are commercial)
the identity of the auditors. As usual, 'commercial' does not include
asset management or holding operations. The Deed of Trust is filed
with the Registrar of Trusts. The minimum trust fund is SFr 30,000.
The participants in a Trust Enterprise are largely shielded from
creditors of the Enterprise, who have access only to its own assets.
Trust Enterprise can be created either without legal personality, and
is then called an 'active trust' (eigentliche Geschaftstreuhand), or
with legal personality, in which case it is called a 'non-active trust'
(uneigentliche Treuunternehmen). Only non-active trusts have gained
currency in Liechtenstein, and they are frequently used to hold
investment assets, for instance in merger situations, and for the
distribution of income from real estate holdings. The legal form of
the Trust Enterprise is close to that of the American 'Massachusetts
of the trustees must be a resident of Liechtenstein holding a
recognised professional or other qualification. In the case of a
non-commercial (ie unaudited) Trust Enterprise, this person certifies
to the Registrar that the Trust has kept proper books and that no
commercial activities have been carried out. This is the only
reporting that is required.
Liechtenstein is the only civil law jurisdiction which has adopted
largely anglo-saxon trust legislation (contained in the PGR Code),
although, unlike the common law trust, there is no bar against
accumulation of income, nor against perpetuities.
Liechtenstein Trust is set up by a written agreement (Trust Deed)
between the trustor (settlor) and trustee(s) which does not have to
contain the names of beneficiaries. If the Trust Deed is deposited
with the Registrar of Trusts, it will not be publicly available, and
later instruments (eg naming beneficiaries) will not have to be
revealed; if the Trust Deed is not deposited within 12 months, details
of the Trust must be placed on the public register. A registration fee
of US$ 200 is payable on registration.
Some of the characteristics of Liechtenstein Trusts are as follows:
- a trustee
(apart from the Liechtenstein professional mentioned above) can be
an individual or a corporation or association;
are liable for breach of trust to the full extent of their assets;
joint trustees are jointly liable; supervision of the trust is
ultimately under the Court, even if the Trust Deed specifies
interests of named beneficiaries can be embodied in trust
certificates, which if registered are transferable securities;
- being a
civil law jurisdiction, trust assets are vulnerable to forced
heirship provisions, although there are time limitations on such
- in general,
there is a limitation of one year on creditors' claims;
documents, including the Trust Deed, can be in any language.
Trusts may be set
up under foreign law, but may not have more favourable treatment
than would apply under Liechtenstein law. A trust under foreign law
is a Liechtenstein Trust and subject to local taxation.
Liechtenstein law applies to a foreign trust if the trustee, or more
than half of the trustees, are resident in Liechtenstein, if the
trust property is in Liechtenstein, or if the Trust Deed says so.
Liechtenstein taxes are levied under the Act relating to National and
Local Taxation 1961, as qualified in yearly Finance Acts. The main
taxes impinging on businesses are Corporation Taxes (Profits Tax and
Net Worth Tax), Capital Tax, Value Added Tax and Coupon (Withholding)
Tax. There is no separate capital gains tax as such; capital gains are
treated as taxable income unless they are from real estate, when
Property Profits Tax applies.
The domestic taxation
regime described here applies to resident companies, meaning those
that have their registered office in Liechtenstein, or which are
managed and controlled from Liechtenstein. However,
(companies that hold investments) or 'domiciliary' companies (not
having trading activities inside Liechtenstein), have a separate
taxation regime, as do Establishments, Foundations and Trusts.
December, 2004, Liechtenstein signed an agreement with the EU by which
the country joins EU and non-EU states implementing the Savings Tax
Directive as from 1st July 2005. Liechtenstein will impose a 15%
withholding tax on the returns from individuals' savings.
Profits Tax is levied on
taxable income at a basic rate between a minimum of 7.5% and a
maximum of 15% according to a formula. The percentage rate is X,
X = (Taxable Income x 100) / (Taxable
Capital x 2).
It will be evident that a
reasonably profitable company will always qualify for the maximum
In addition, if dividend
distribution exceeds 8% of Taxable Capital (same definition) there
is a surcharge of up to 5% of Taxable Income in the year in which
the dividend is declared, as follows:
Dividend as % of Taxable Capital
Tax Surcharge, %
> 8 up
> 10 up
> 12 up
> 14 up
> 16 up
> 18 up
> 20 up
> 22 up
Thus, the maximum rate of profits
tax is 20%, likely to be incurred by a company which makes a
decent profit without much capital employed.
Calculation of Taxable Base
to the legislation, profits tax (and capital tax, see below) are
levied only on the proportion of income (or capital) that the
Liechtenstein operation bears to the company's world-wide
operations; plus, in the case of profits tax, any profits that are
remitted to Liechtenstein. The interpretation of this rule is
complex and cannot be simply explained here.
The following are some
of the main provisions affecting calculation of the taxable base
for the profits tax:
- Inventories are to be stated at
the lower of cost or market value; FIFO is usually applied.
General reserves up to one third of of value are usually
accepted without demur.
- Capital gains, otherwise than
from real estate, are treated as taxable income.
- Capital gains from real estate
are taxed at between a minimum of 1.2% and a maximum of 35.64%
(sic) depending on the amount of the gain, the length of time
the property was held, etc etc.
- Foreign dividends after taxation
are included in taxable income (but in the case of foreign
subsidiaries, this interacts in a complicated way with the 'proportion'
rule stated above, especially because there is no group relief
- Companies may capitalise
reserves or undistributed profits, but any resulting increase in
the carrying value of shareholders' interests will be counted as
taxable income for the company.
- Either straight-line or
declining balance depreciation methods are allowed. Higher rates
may be permitted on occasion. There are detailed schedules of
depreciation rates applicable to various types of asset. It may
be worth noting that goodwill can be depreciated at 25% per
annum (declining balance) or 12.5% (straight-line).
- Gains on realisation of assets
are taken to taxable income.
- Trading losses can be carried
forwards for two years, but not backwards.
- There is no group relief.
- All taxes paid, including
profits tax, are deductible from income in the accounting period
in which they are paid (the year after the fiscal year, usually).
Net Worth Tax
The net worth tax is levied on the
share capital of a company (original capital plus subsequent
increases) plus open and hidden reserves, in so far as these form
part of the company's net worth.
In this calculation, reserves might
for instance include retained earnings brought forward, provisions
for income and capital taxes, disallowed inventory and
depreciation reserves, and any other disclosed or undisclosed
reserves; deductions might include any current year loss, a net
deficit brought foward, dividends in excess of the current year's
net profit, and any capital increase in the current year. Other
items might also be involved depending on circumstances.
The rate of net worth tax applying
to a resident company is 0.2% of taxable net worth.
Stamp Duty in
Liechtenstein is levied according to Swiss legislation, which was
substantially amended by the Swiss Federal Law on Stamp Duty 1993.
There is a liability to stamp duty on the issue of shares and
bonds. Zero rates apply to mergers and other corporate
transformations. Issuance of foreign securities was relieved from
stamping in 1993, but turnover tax applies (see below).
As of 1998, the rate
of stamp duty on shares (the issue of capital in a corporation) is
1%; but the first SFr 250,000 of any issue of capital (initial or
subsequent) is exempt.
The issue of corporate
bonds attracts stamping at 0.12% for each year of the term of a
long-term bond; the rate is 0.06% per year for medium- and
Turnover Tax is
payable by securities dealers and traders (Effektenhandler), which
includes banks, financing companies, investment funds, and other
entities or persons whose business is focussed mainly on
securities dealing, trading or broking. It also applies in general
to companies whose assets include taxable securities valued at
more than SFr 10 million.
The rate of turnover
tax varies between 0.15% and 0.30%.
Property Profits Tax
The Property Profits Tax applies to
any individual or corporate person who gains from a real property
transaction. The taxable profit is the amount by which the
proceeds of sale exceed the invested cost. 'Invested cost' is an
officially-assessed value plus any excess of original purchase
cost and subsequent capital additions (less maintenance costs)
over the assessed value.
The rate of property profits tax is
set annually by Parliament, and is usually equal to the rate of
the general Profits Tax.
Value Added Tax
the entry of Liechtenstein into the EEA, Value Added Tax was
introduced under the Law on Value Added Tax 1995. The law is very
similar to the equivalent Swiss law.
The rate of VAT is
6.5%, with a reduced rate of 2% for food, printed matter and
medecines. Exports are exempt, as are medical and educational
services, and most real estate transactions.
Tax applies to companies whose capital is divided into shares, and
is levied at the rate of 4% on any distribution of dividends or
profit shares (including distributions in the form of shares).
Generally, there is no withholding tax on interest or royalty
payments, but it does apply to interest from bonds, to interest
from time deposits with domestic banks in excess of 12 months, and
to interest on some commercial loans over SFr 50,000 with a
minimum term over 2 years. Most normal inter-company loans are not
caught by the coupon tax.
Filing Requirements and Payment of Tax
Entities subject to
Profits Tax must file a return within six weeks of the
shareholders' meeting which adopts the financial statements, and
no later than 1st July in the calendar year following the end of
the company's fiscal year.
The tax assessment is
then normally received in the autumn, and the tax due is payable
within one month of receipt of the assessment. Instalment payment
can sometimes be agreed with the tax authorities.