- Corporate Taxation
Business entities – Corporation (AG), Limited Liability Company (GmbH), Foundation (Stiftung), Establishment (Ansult), Trust (Treuhanderschaft) and branch of a foreign company.
Residence – Companies with their registered office of effective management in Liechtenstein are considered resident for tax purposes.
Basis – Resident companies are taxed on their worldwide income, except for profits derived from foreign branches and foreign immovable property, which are tax exempt. Real estate capital gains from Liechtenstein sources are exempt to the extent they are subject to real estate capital gains tax. Non-resident companies are taxed on permanent establishment/branch income and/or income from immovable property locally located.
Taxable income – Corporate income is levied on a company’s profit before tax, which consists of business/trading income, passive income and capital gains, but an exemption is granted for dividend income and capital gains from participations.
Taxation of dividends – Dividends received by a resident company are exempt from taxation.
Capital gains – Capital gains are treated as ordinary income, regardless of the length of time the assets have been held. If assets are sold to a shareholder or related corporation at a price below market values, gains may be reassessed for tax purposes. Capital gains derived from the sale of participation are exempt.
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 cannot be carried back.
Rate – 12.5%
Alternative minimum tax – A minimum tax of CHF 1,200 applies (except for small businesses).
Foreign tax credit – No credit is granted for foreign tax paid (except for non-refundable withholding tax on interest and royalties under applicable tax treaties and in cases of reciprocity).
Participation exemption – Capital gains derived from the sale of participation, as well as dividends from participations, are exempt. There is no minimum withholding requirement.
Holding company regime – None, but a full exemption is available for dividends and capital gains from the sale of participations.
Incentives – Liechtenstein allows for a notional deduction of 80% of the net income form intellectual property acquired or created on or after 1 January 2011.
Special rules apply for the operation of merchant ships and to private investment structures.
- Withholding tax
Dividends – There is no withholding tax on dividend distributions. Accured reserves accumulated before 1 January 2011 were subject to an old reserves practice under which the previous dividend withholding tax rate of 2.5% applied. Irrespective of any dividend distributions, these old reserves were subject to tax on 31 December 2015.
Interest – No
Royalties – No
Technical service fees – No
Branch remittance tax – No
- Other taxes on corporations
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.
Real property tax – None, but the sale of real estate located in Liechtenstein or the sale of shares in a Liechtenstein real estate company is subject to real estate capital gains tax. The holding period has no impact on the real estate capital gains tax rate.
Social security – The employer generally is required to pay slightly more than 50% of the employee’s social security and pension fund contributions.
Stamp duty – Liechtenstein is considered part of Switzerland for stamp tax purposes, as a result the Swiss stamp duty of 1% is levied on contributions to the equity of Liechtenstein company, regardless whether the contributions are made in cash or in kind.
Transfer tax – The Swiss securities transfer tax is applicable to security dealers resident in Liechtenstein. The transfer of securities by dealers is subject to a 0.15% tax on Swiss and Liechtenstein securities, and a 0.4% rate on foreign securities.
- Anti-avoidance rules
Tax Year – Accounting year
Consolidated returns – Companies within a tax group may opt for group taxation. Both domestic and foreign subsidiaries may be integrated in a group with a Liechtenstein head of the tax group. Losses can be allocated on a pro rata basis to the head of the group and other group members.
Filing requirements – 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 – Penalties apply for late filing 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.
- Personal Taxation
Basis – Resident individuals are taxed on their worldwide wealth and income, except for profits from and net wealth in, foreign business, foreign branches and immovable property. Non-residents are taxed on Liechtenstein employment income and business profits.
Residence – Residence is determined based on whether an individual has a domicile in Liechtenstein or intends to stay in Liechtenstein permanently.
Taxable income – 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.
Capital gains – 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.
Rates – Rates for national income tax are progressive up to 8%.
- Other taxes on individuals
No capital duty, no stamp duty, no capital acquisition tax, no inheritance tax
Real property tax – only notional income on the net value of property is subject to income tax.
Net wealth – Net wealth is multiplied by 4% to calculate the notional income from wealth, which is subject to income tax.
- Compliance for individuals
Tax Year – Calendar year
Filing and payment – Filing deadline is in April of the year following the tax year. Penalties apply for late filing or failure to file.
Taxable transactions – Liechtenstein is considered part of Switzerland for VAT purposes. VAT applies to the sale and import of goods and services in Liechtenstein. Export of goods and services are zero-rated. The standard VAT rate is 8% with certain goods and services which are subject to a reduce rate of 2.5% and others are exempt.
Registration – Enterprises whose annual turnover exceeds CHF 100,000 must register for VAT purposes. VAT returns must be filed quarterly and VAT amount has to be remitted to the tax authorities.
Liechtenstein has concluded 16 tax treaties. Liechtenstein and Switzerland have concluded a new tax treaty that has become effective on 1 January 2017.