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Liechtenstein-Anstalt

Basic taxes (briefly)

Personal tax
Corporate tax (in detail)
Capital gains tax. Details
VAT. Details
Other taxes
Government fee
Stamp duty

International tax agreement

   


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TAXATION

Overview

Liechtenstein has introduced a new Law on National and Municipal Taxes which has entered into force as per 1. January 2011 and changed the country’s taxation system enormously.
Among the main features of the new taxation system are the following:
  • Corporate income tax of 12.5%
  • Implementation of Minimum corporate income tax of CHF1’200 p.a.
  • Abolishment of withholding tax on dividends (Coupons tax) on profits 
generated as from 1. January 2011.
  • Implementation of notional interest deduction
  • No taxation of dividend income, no capital gains and liquidation surplus 
taxation on participations
  • Implementation of timely unlimited deduction of loss carry forward for 
ordinarily taxed companies. Each year however only 70% of the net 
corporate income may be offset by a loss carry forward.
  • Introduction of international group taxation
  • Deductions from income of intellectual property rights

Personal Income Tax

Resident individuals are taxed on their worldwide wealth (on which a notional income is calculated) and worldwide income, except for profits from and net wealth in foreign businesses, foreign branches and foreign immovable property, which are tax- exempt.
Nonresidents are taxed on Liechtenstein employment income, business profits and profits attributable to immovable property in Liechtenstein.
Income tax applies to all income derived from compensation for work performed and to income from capital (both real and movable property), calculated as a notional income of 4% of net wealth.
Rates for national income tax are progressive up to 7%. Municipal multipliers range from 1.5 to 2.5 (i.e. theoretical maximum combined rate of 24.5% although currently the multiplier does not exceed two in any municipality).
Tax year for individuals conforms to calendae year. The normal filing deadline is 15 April of the year following the tax year. The tax is in general due upon assessment by the tax authorities. Penalties apply for late filing or failure to file.

Corporate Income Tax

Corporate income tax is levied on worldwide income of resident companies, except for profits derived from foreign branches and foreign immovable property, which are tax-exempt. Nonresident companies are taxed on permanent establishment/branch income and/or income from immovable property located in Liechtenstein.
Taxable income includes a company’s net profits, which consist of business/trading income, passive income and capital gains, but an exemption is granted for dividend income and capital gains from participations. A notional interest deduction of 4% is granted on the weighted equity of the company.
Corporate income tax is levied at a fixed rate of 12,5%.

Capital Gains Tax

Capital gains are included in chargeable income, except for those arising from the sale of real estate and to which Liechtenstein real estate property tax is applied.

Dividends

Dividends received by a resident company are exempt from taxation.

Losses

Losses may be carried forward indefinitely and set off against taxable profits. Losses may not be carried back. Losses of foreign permanent establishments and foreign group companies may be used, subject to a recapture rule.

Alternative Minimum Tax

A minimum tax of CHF 1,200 applies (except for small businesses). Alternative minimum tax is levied on private asset structures (Privatvermögensstruktur, PVS).
Taxable persons whose sole object is to engage in business on a commercial basis and whose average balance-sheet total over the past three financial years has not exceeded CHF 500‘000 are charged no minimum corporate income tax. Article 62(3) of the Liechtenstein Tax Act is designed not to overburden small businesses which have legal personality but earn consistently low income, with minimum corporate income tax.

Tax Benefits and Private Asset Structures

Private asset structures (Privatvermögensstruktur, PVS) can enjoy tax benefits, if it pursues no business activity. As mentioned above, they pay alternative minimum tax only.
All legal persons meeting the following conditions shall be deemed private asset structures:
  • Those which, pursuant to their objects, engage in no economic activity, especially if they only acquire, hold, manage and dispose of financial instruments;
  • Those whose shares or units are not publicly listed, not traded on a stock market and which are reserved to be held by the investors;
  • Those which neither advertise for shareholders or investors nor receive remuneration or reimbursement of expenses from them or from third parties for their activity;
  • Those whose Articles of Association state that they shall be bound by the restrictions on private asset structures.

The taxpayer shall confirm to the Tax Administration on formation, and thereafter in case of major changes, that the above conditions are met.
A private asset structure may hold investment items not pertaining to a business activity in the terms of European aid law. Therefore the permitted field of activity of a private asset structure must remain very narrow, in order to remain in conformity with the rules of European law on aid. In principle, it is possible to hold portfolios of gold, paintings and similar valuables. The exercise of property rights as such by the owner is not deemed an economic activity. The same applies to disposal. However, this must not constitute trading in holdings of gold or similar valuables on a commercial basis. A private asset structure is also permitted to use real estate for its own purposes, since this does not constitute economic activity offered on the market. However, if the private asset structure does not use the property, but makes it available free or for paid consideration, that may possibly be deemed economic activity. The same applies to granting loans and holding private equity interests.

Tax Year

Tax year for legal persons is accounting year.

Withholding Tax

Dividends are not taxed as from 1 January 2011. Accrued reserves accumulated before that date are subject to an old reserves practice and remain subject to the previously applicable dividend withholding tax of 4%.
Interest is not taxed.
Royalties are not taxed.
Technical service fees are not taxed.

VAT

Based on the Customs Union Agreement of 29 March 1923, Liechtenstein is considered part of Switzerland for VAT purposes. In principle, it is imposed on five types of economic transactions:
  • Delivery of objects in Liechtenstein in return for payment
  • Services rendered in Liechtenstein in return for payment
  • Domestic consumption (“domestic” embracing the common Swiss/Liechtenstein economic area)
  • Procurement of services from abroad
  • Import of objects

The standard VAT rate is 8%, with a reduced rate of 2.5% for food, printed matter and medicines. Exports and most real estate transactions are exempt, as are charitable, cultural, educational, and religious transactions and medical and educational services. A special 3.8% rate applies to the hotel and lodging industry.

VAT Registration

Registration for VAT is compulsory for businesses, whose annual turnover exceeds CHF 100,000.

VAT Tax Period and Returns

VAT returns must be filed quarterly and the relevant VAT amount remitted to the tax authorities.

Stamp Duty

Pursuant to the Customs Treaty of 1923 between the Principality of Liechtenstein and the Swiss Confederation, stamp duty in Liechtenstein is levied according to the Swiss Federal Law on Stamp Duty. Stamp duty is non-recurring and applies to legal transactions with certain instruments. There are three types of stamp duties:
  • Securities issue tax. It applies to the establishment and increase of the nominal value of domestic rights of participation (including shares, share certificates of limited companies and of cooperative societies). The contributions rendered by shareholders to the company without corresponding consideration are considered equivalent to the establishment of rights of participation. The rate of duty is 1% of the amount received by the company as consideration for the rights of participation (but at least the nominal value) or the contribution rendered to the company; a general exemption limit of CHF 250,000 applies. Tax liability rests with the company issuing the rights of participation.
  • Turnover tax. It applies to the transfer against payment of ownership in certain instruments (such as bonds, shares, participation certificates, shares in investment funds), if one party or intermediary is a domestic securities dealer. The duty is calculated on the basis of the payment and is 0.15% for instruments issued by a domestic issuer and 0.3% for instruments issued by a foreign issuer. Tax liability rests with the domestic securities dealer.
  • Tax on insurance premiums. It generally applies to all insurance premium payments for policies belonging to the domestic portfolio of a supervised insurer. In addition, premium payments for policies concluded by a domestic policyholder with a foreign non-supervised insurer are subject to tax. Due to a comprehensive list of exemptions, generally only premium payments for liability and vehicle damage insurance as well as for certain property insurance are still subject to tax, but not premium payments for personal insurance. The tax is calculated on the cash premium and is in general 5%, 2.5% for single-premium redeemable life insurance. Tax liability rests with the domestic insurer or with the policyholder who has concluded a policy with a foreign insurer.

Government Fee

There is no annual government fee in Liechtenstein.

Other Taxes and Duties

Real property tax No, but the sale of real estate situated in Liechtenstein or the sale of shares in a Liechtenstein real estate company are subject to real estate capital gains tax at the ordinary income tax rates for individuals.
Net wealth tax Net wealth is multiplied by 4% to calculate notional income from wealth, which is subject to income tax.
Social security contribution For 2013, the annual contribution of 11.67% of total employee remuneration (with no ceiling) is divided between the employer and the employee. The employer generally is required to pay about 50% of an employee's social security and pension fund contributions. The employer must deduct contributions from salary and remit the total amount to the social security authorities.

Anti-Avoidance Rules

Transfer pricing: Liechtenstein does not have any formal transfer pricing legislation or documentation requirements, although all related party transactions with Liechtenstein entities must be carried out on arm's length terms. In general, Liechtenstein follows the OECD transfer pricing guidelines.
Thin capitalization: No.
Controlled foreign companies: No.
Disclosure requirements: No

Double Tax Agreements

Liechtenstein has exchange of information relationships with 40 jurisdictions through:
  • 17 DTCs: Andorra, Austria, Czech Republic, Georgia, Germany, Guernsey, Hong Kong, Hungary, Iceland, Luxembourg, Malta, San Marino, Singapore, Switzerland, United Arab Emirates, United Kingdom, Uruguay.
  • 27 TIEAs: Andorra, Antigua and Barbuda, Australia, Belgium, Canada, China, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Guernsey, Iceland, India, Ireland, Italy, Japan, Mexico, Monaco, Netherlands, Norway, Saint Kitts and Nevis, Saint Vincent and the Grenadines, South Africa, Sweden, United Kingdom, United States.

Foreign exchange control

There are no foreign exchange controls in Liechtenstein.

ACCOUNTS

Financial Statements

If the Anstalt carries on business, or if its objects as laid down in the articles permit the same, then fully audited financial statements (comprising the balance sheet, profit-and-loss account and if necessary the annex) must be submitted annually to the Liechtenstein tax authorities. The statements are not required to be published. If the objects of the Anstalt are limited to the management of assets, holding of participations and other rights, then it is not necessary to appoint an auditor. In this case, the Anstalt is obligated to make a Declaration concerning its net worth. The Board member of the Anstalt resident in Liechtenstein must give a written Declaration to the Public Register within six months after the close of the financial year. This Declaration must merely confirm that a list of assets has been drawn up at the end of the previous financial year (without revealing information concerning the actual net worth) and that the Anstalt has not carried out any commercial business during the previous year. All records of an Anstalt must be preserved for ten years. Accounting books and records, with the exception of the financial statements, may be stored in microfilm or similar form.

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.

Liechtenstein establishments are not required to prepare Annual Return.

Tax Returns

The tax return must be filed by 1 July of the year following the tax year. Tax payments are due by 31 August following the tax year.
Penalties apply for late filing or failure to file.

    Taxes of Liechtenstein-Anstalt

    Min. rate for corporate tax
    Capital gains tax
    VAT
    Withholding tax
    Exchange control
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