Taxes in the
Principality of Liechtenstein
The new Tax Act came into force in January 2011 (Act of 23 September 2010 concerning National and Municipal Taxes – “Gesetz vom 23. September über die Landes- und Gemeindesteuern”). This gave the Principality of Liechtenstein simple, internationally compatible tax laws which are compliant with European law.
Tax on earnings
In general terms, tax on earnings for all legal entities domiciled in the Principality of Liechtenstein amounts to 12.5% of taxable net earnings, with a minimum tax charge of CHF 1,200.00 per annum.
Capital and coupon taxes are no longer imposed.
The attributable tax base does not include
- capital gains
- earnings of non-domestic permanent establishments
- tenancy and franchise earnings from non-domestic real estate assets
- real estate capital gains
- capital growth from inheritance, bequest or gifting
- capital contributions including à fonds perdu benefits
Furthermore, an equity capital interest deduction, currently amounting to 4%, is also permitted. This reduces the attributable tax base, thus lowering the effective tax rate. The interest rate is adjusted annually by the tax administration on the basis of the general interest level.
The modified equity capital is calculated as follows:
+ paid-in capital
– stakes in legal entities
– non-domestic real estate assets
– non-domestic permanent establishment assets
– non-operating assets
= modified capital
Transitional arrangements for historical reserves resulting from the abolition of coupon tax
For companies which were previously subject to the 4% coupon tax on dividend distributions, the historical reserves available on 31 December 2010, i.e. the cumulative profits which had not yet been distributed by this date, shall be settled in the years 2011 and 2012 at a reduced rate of 2%. From 2013 onwards, these historical reserves shall once again be settled at the earlier rate of 4%, whereby distributions shall be deemed to have been drawn from the historical reserves, insofar as these have not been depleted. These historical reserves cannot be offset against financial year losses from 2011 onwards.
Private asset structures
Drawing upon the rules of the Luxembourg Société de Gestion de Patrimoine Familial (SPF), a new tax privilege for legal entities which engage exclusively in asset management and do not exercise any economic activity has now replaced the special company taxes. This involves the creation of so-called private asset structures (Privatvermögensstrukturen – “PVS”). The restrictions applicable to the PVS need to be stipulated in the articles of association.
PVS status is granted by the tax administration, upon request.
PVS are subject to the minimum earnings tax charge of CHF 1,200.00 per annum.