• Liechtenstein Tax System

  • TAX RESIDENCY

    Tax Residency

    A company is considered to be tax resident in Liechtenstein if it has its legal seat or effective place of business in Liechtenstein.

    Taxable Basis

    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.

  • TAX ADMIN

    Taxable Period

    The taxable period for a company in Liechtenstein is the calendar year i.e. from 01/01 to 31/12.

    Tax Returns

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

    Group tax returns are not allowed in Liechtenstein.

    Tax Assessments

    The Tax Authorities have 5 years to issue an assessment if they consider that the tax return is incorrect.

  • CORPORATION TAX

    Corporation Tax

    Corporation tax is levied at the flat rate of 12.5% but a minimum annual tax is applicable at CHF 1,200.

    Private Vehicle Solution (PVS): A PVS is a private asset structure defined as a legal entity that has no economic activity. The purpose of a PVS is to acquire, hold, administer and sell financial instruments and cash and bank accounts. Participations in other legal entities may only be held if it can be proved that the shareholders or beneficiaries have no influence on the administration of this company.

    The investors of a PVS must be individuals who administer their own assets or structures acting in the interest of individuals.

    A PVS is subject only to the minimum corporate income tax of CHF 1,200 and not subject to any tax assessment.

  • DIVIDENDS

    Dividends from Foreign Investments

    Dividend income from foreign investments is not subject to tax in Liechtenstein.

    Dividends from Local Investments

    Dividend income from local investments is not subject to tax in Liechtenstein.

    Withholding Tax on Dividends

    Liechtenstein does not impose any withholding tax on dividends to local or foreign recipients for distributions of reserves of 2011 onwards i.e. following the introduction of the new tax legislation.

    However, undistributed reserves of prior years and up to 2010 are subject to a coupon (withholding) tax upon distribution at the following rates:

    • 2% for distributions made until 31/12/2012.
    • 4% for distributions made on or after 01/01/2013.
  • INTEREST

    Interest Income

    Interest income is taxable under income tax.

    Interest Expense Deductibility

    Interest expense is generally tax deductible as a business expense.

    Withholding Tax on Interest

    There is no withholding tax on interest payments to local or foreign recipients.

    Equity Interest Deduction

    A standardized deduction for interest on equity is available, known as the equity interest deduction.

    The 2012 equity interest deduction is at 4% on the "modified equity" defined as the company's capital less own shares, investments in shares/participations, foreign real estate, assets of foreign permanent establishments and non-operating assets.

  • ROYALTIES

    Royalty Income

    Royalty income is taxable under income tax. However, a deemed deduction of 80% of qualifying income from intellectual property (IP) is granted. An analysis of Liechtenstein's IP regime can be found here.

    Royalty Expense Deductibility

    Royalty expense is generally tax deductible.

    Withholding Tax on Royalties

    There is no withholding tax on royalty payments to local or foreign recipients.

  • TAX LOSSES

    Ordinary Tax Losses

    Ordinary tax losses can be carried forward indefinitely. However, utilization of tax losses is limited to 70% each year.

    Ordinary tax losses cannot be carried back.

    Group Relief

    The Liechtenstein tax system allows for companies to form a group for tax purposes whereby current year ordinary tax losses may be transferred between members of the tax group.

    A tax group is created when a company owns 50% of the capital and 50% of the voting rights of another resident or foreign company. The ultimate group leader needs to be a Liechtenstein company.

  • CAPITAL GAINS

    Disposal of Shares by Foreign Shareholder

    The profit on disposal of a Liechtenstein company by its foreign individual shareholder is exempt from tax in Liechtenstein.

    Capital Gains

    Capital gains are taxable under income tax.

    However, gains from the disposal of shares in domestic or foreign participations or gains from the disposal of foreign real estate are exempt from income tax in Liechtenstein.

    In addition, gains from the disposal of domestic real estate are exempt from income tax but are subject to real estate capital gains tax (at a rate between 2% and 14% depending on the amount of taxable real estate gain).

    Capital Losses

    There are no specific rules for capital losses in the tax legislation of Liechtenstein.

  • PARTNERSHIPS

    Partnership Profits

    Partnerships are treated as transparent entities for tax purposes, which means that their profits are taxed directly in the hands of each partner.

  • BRANCHES

    Branch Profits

    A Branch is treated in the same manner as other types of companies in Liechtenstein.

    There is no tax in Liechtenstein on the remittance of the profit of a Liechtenstein Branch to its foreign head office.

  • STAMP DUTY

    Stamp Duty

    Stamp duty of 1% is payable on contributions over CHF 1million to equity of a Liechtenstein company.

  • CAPITAL DUTY

    Capital Duty

    There is no capital duty in Liechtenstein.

  • VAT

    VAT Taxable Transactions

    VAT is levied on the supply of goods and services.

    VAT Standard Rate

    The standard rate of VAT is 8%.

    VAT Reduced Rate(s)

    The reduced rates of VAT are 3.8% (hotel and lodging industry) and 2.5% (deliveries of food, drugs, magazines, newspapers and books) and 0%.

    VAT Exempt Transactions

    Health, social insurance, education, banking and insurance are exempt from VAT in Liechtenstein.

    VAT Registration Threshold

    The registration threshold for VAT purposes in Liechtenstein is CHF 100,000.

    VAT Filing & Payment

    Filing of VAT returns and the payment of VAT liability is made every 3 months.