Liechtenstein

A very smal country in Central Europe. The name comes from the country's ruling family of Liechtenstein. Is a member of the UN, the European Free Trade Association, part of the Schengen zone.

Capital

Vaduz

Official language

German

Currency

Swiss franc (CHF)

Government

Liechtenstein is a constitutional monarchy. Prince manages the State endorses legislation acts accepted by the Parliament, represents Liechtenstein in its relations with other states, appoints civil servants. With the consent of the parliament Prince appoints a coalition government composed of his head, and four councilors.

Economy

Liechtenstein is a prosperous country with a developed financial services sector and a high standard of living. The stability of the economy and a customs union with Switzerland, has made Liechtenstein an attractive jurisdiction. A stable banking sector is not obliged apply the laws of the EU. The main branch of the economy is manufacturing, which is targeted for export. The basis of the industry makes precise engineering and instrument making. Tourism brings a significant income to the country.

Corporate law

  • Law on Persons and Companies 1926 (known as the PGR Code)
  • Act on the Supervision of Financial Market Authority Liechtenstein 2004
  • Asset Management Act 2006
  • Due Diligence Act of 2001, amended in 2004
  • Law on Banks and Financial Companies 1998
  • Law on Value Added Tax in 1995
  • Swiss Federal Law on Stamp Duty in 1993

Types of companies

  • Limited Liability Company (GmBH)
  • The company liability limited by shares (Aktiengesellschaft)
  • Foundation
  • Establishment (Anstalt)
  • Trust settlement

Limited Liability Company (GmBH)

  • A limited liability company (GmbH) can be created by two or more members.
  • The minimum share capital is CHF 30,000. Each member must pay a minimum of CHF 50, payment of the remaining amount of capital is not required, unless it is stipulated in the Charter. Liability of members is limited to the amount deposited by them of the capital.

Foundation

  • Foundation is the most common form of the company, created in Liechtenstein. Assets that were endowed to the Foundation, become separated from the founder, and shall be for a particular purpose.
  • The Foundation is a separate legal entity. Most of all Foundations are suitable for asset management and distribution of the inheritance.
  • The Foundation may be established as a family foundation (eg for distribution of assets to education for children) or as a nonprofit organization (eg to support charity events, art, science).
  • The formal supervision is applied to non-profit foundations, and under certain conditions only.
  • The minimum amount of assets endowed is CHF 30,000.
  • Beneficiaries of the Foundation may be defined in various ways, that are specified in the charter or regulations. A founder may prescribe certain rights for themselves (through the Foundation Board and curator, or a protector).
  • Appointment of an auditor is required for Foundations, leading business activity. The Foundation shall keep account books. Under certain conditions, the annual report with the translation into German should be submitted to the Liechtenstein tax authority.
  • At least one member of the administration of Foundation (board or trusteed) must have a registered legal office in Liechtenstein and have professional qualifications.

Establishment (Anstalt)

  • Establishment, or Anstalt is a form of company that exists only in Liechtenstein. It is an autonomous fund with beneficiaries, which can be used for commercial purposes or for asset management.
  • The Establishment is not a public company in Liechtenstein, do not confuse it with the appropriate form of companies in other jurisdictions.
  • The Establishment may engage in, for example, trade of goods, investment, financing, property management, leasing, asset management for a particular beneficiary or charity. However, banking can be carried out exclusively by banks, asset management for third parties must be done by licensed in Liechtenstein managers.
  • Typically, founder has the right to govern the Establishment. Administration of the Establishment is done by the Board of Directors.
  • If the Establishment engages in commercial activity, it must have an auditor and submit an annual report to the tax authorities. Any organization must keep accounting books.

Taxation of company

On January 1, 2011 tax reform has entered into force in Liechtenstein. The only difference is now made between the companies, leading commercial activity and leading njncommercial activity. The law no longer distinguishes between domicile and holding companies.

All companies (foundations, establishments, GmBH, etc.), leading commercial activiy are taxed as follows:

  • A unified tax on income: 10.6% Minimum CHF1,200.00.
  • A unified tax on income from intellectual property 2.5%
  • No tax on investment income, and distribution of dividends.
  • Group taxation is applicable of affiliated companies.

All companies involved only in asset management and leading noncommercial activity, having tax status of PVS (private assets structures) only pay the minimum tax on income in the amount of CHF 1,200.00.

Agreements on avoidance of double taxation

Austria, Hong Kong, Germany, UK, Georgia.