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Online News Sources
Liechtenstein News: www.news.li
Business Environment
Liechtenstein and Switzerland signed a tariff and trade agreement
in 1924, which has evolved into an economic, monetary and postal union.
As a result, the border between Switzerland and Liechtenstein is open
and the Swiss franc is Liechtenstein’s legal currency. Liechtenstein
joined the Council of Europe in 1978, the UN in 1990, the European Free
Trade Association (EFTA) in 1991 and the European Economic Area (EEA)
in 1995. The EEA allows Liechtenstein to participate to a limited
extent in the EU internal market and excludes agriculture, the customs
union and monetary union.
Liechtenstein offers an extremely stable and efficient business
environment with modern infrastructure and excellent
telecommunications. There is a wide variety of corporate forms
available for most purposes and the legislative structure is flexible
and liberal. Although Liechtenstein is a 'civil code' jurisdiction,
legislation has created a trust regime which is widely used.
Liechtenstein was blacklisted by the Financial Action Task Force
(FATF) as ‘noncooperative’ in the fight against money laundering in
June 2000. Following significant changes to Liechtenstein’s legislation
and supervision of the financial sector the FATF removed the country
from its blacklist in June 2001. In 2002, Liechtenstein underwent an
Offshore Financial Centre Assessment by the IMF. In their report of
September 2003, the IMF experts attested Liechtenstein's preventive
measures against money laundering and financing of terrorism a "high level of compliance with international standards", including,
a high degree of implementation of the FATF (Financial Action Task
Force) recommendations on combating money laundering as well as the 8
special recommendations of the FATF on combating the financing of
terrorism
T he International Monetary Fund (IMF) also recommended in their
report that Liechtenstein undertake to strengthen its financial market
supervision. The Government succeeded in drafting a law on independent
and integrated financial market supervision within a year and in
undertaking the necessary legislative amendments. Parliament adopted
the Financial Market Supervision Act on 18 June 2004. On 1 January
2005, the new supervisory authority began its work. The
responsibilities of Liechtenstein’s Financial Market Supervisory
Authority (FMA) integrates the supervisory tasks that were previously
assumed by the government, the Financial Services Authority, the Office
of Economic Affairs (Insurance Division), and the Due Diligence Unit
namely, the supervision of banks, lawyers, professional trustees,
investment undertakings, and insurance companies. A five-person Board
under the direction of René H. Melliger is responsible for overall
management, supervision, and oversight, but also advises the Government
on questions concerning the financial center. Various powers that
special laws had previously assigned to the Government, such as
granting and revoking concessions, have now been transferred to the
Board. The FMA operates as an autonomous institution under public law.
The organs of the FMA are The Board, the General Management, and the
Auditing Office.
Current applications to set up a business are made to government's
department for the national economy. All documents must be submitted in
German. Documents submitted as part of the application must be
translated and officially certified. Corporate bodies are formed under
the Law on Persons and Companies 1926, as amended. The legislation
allows the formation of a limited company by shares (AG/Ltd.), a
limited company by shares (AG/Ltd.) structured as an offshore company
(minimum fully paid up capital Sfr50,000 and the minimum annual capital
tax is Sfr1,000. Companies formed as joint-stock companies must have an
initial capital of at least Sfr50,000 -- divided into either bearer or
registered shares. Companies formed as establishments, trust
corporations or foundations must have initial capital of at least
Sfr30,000. Establishments do not have to have their initial capital to
be divided into shares. Companies formed as foundations may be family
foundations and ecclesiastical foundations. There are an estimated
73,700 holding companies registered in Liechtenstein.
Taxes
Commercial operations in Liechtenstein are subject to capital and
profits taxes. A formation tax (stamp duty), payable on formation of a
company and on a capital increase is assessed at 1% or with a tax-free
allowance of Sfr250,000. Foreign companies operating a branch in
Liechtenstein are also subject to the capital and profits tax
requirement. The tax rate for capital taxes is 0.2%. Profits taxes are
assessed on the entire annual net profit. The profits tax rate depends
on the ratio of net profit to capital and lies between 7.5% and 15%.
The tax rate may be increased by 1% to at most 5% depending on the
relation between distribution and taxable capital. The maximum profits
tax is therefore 20%. Holding companies, domiciliary companies, and
investment companies (investment funds) domiciled in Liechtenstein pay
no profits taxes, but pay capital taxes of 0.1% of the paid-up capital
or assets invested in the company or Sfr1000 annually, whichever is
higher. For foundations, the capital tax for the amount of assets
including reserves exceeding Sfr2 million is reduced to 0.075% and for
the amount of assets including reserves exceeding Sfr10 million to
0.050%. For Liechtenstein investment companies (investment funds), the
tax is also reduced to 0.040% for the amount of assets including
reserves exceeding Sfr2 million. Insurance companies under the
Insurance Supervision Act exclusively operating as captives pay a
capital tax of 0.1% on the company's equity. The tax rate for equity
exceeding Sfr50 million is reduced to 0.075% and for equity exceeding
Sfr100 million francs to 0.050%. Insurance companies operating both as
captives and also for third parties are subject to the capital and
profits taxes for the part arising from the insurance of third parties.
Indirect taxes include estate, inheritance, and gift tax, value
added tax, stamp duties and a coupon tax. Coupon tax, levied on capital
interest coupons from legal persons, bonds and other entities is
payable at a rate of 4%. The stamp duty on domestic equities is usually
1% with a tax-free allowance of Sfr250,000. The transaction duty
on transfers of securities is 1.5 or 3%. Residents and those employed
in Liechtenstein are required to pay property and income taxes. General
partnerships and limited partnerships are also subject to property and
income taxes, as well as legal entities and trusteeships not subject to
company taxes (capital and profits taxes and special company taxes).
There is also a municipal tax surcharge. When calculated along with the
average municipal tax surcharge, the minimum property tax rate is
currently 0.162% and the maximum is 0.8505%. The minimum Income tax is
currently 3.24% and the maximum is 17.01%. Employers are required to
deduct a basic amount of the income tax from an employee's monthly
salary and wage payments and forward it to the Liechtenstein Tax
Authority.
Along with Switzerland, in 2004 Liechtenstein accepted the EU's
Savings Tax Directive, andsince 1 July 2005 has imposed a withholding
tax on interest and other savings returns paid to citizens of the
member states of the EU.
Key Contacts
FMA Financial Market Authority Liechtenstein
Heiligkreuz 8
P.O. Box 684
LI-9490 Vaduz
Principality of Liechtenstein
Phone: +423 236 73 73
Fax: +423 236 73 74
E-Mail: info@fma-li.li
Department for National Economy (Amt für Volkswirtschaft Wirtschaft.)
Gerberweg 5
9490 Vaduz
Tel: (+423) 236 64 59
Fax: (+423) 236 68 89
E-mail: info.wirtschaft@avw.llv.li
Liechtenstein Investment Fund Association
Herrengasse 21 A, PF 1507
FL-9490 Vaduz
Telephone ++423/791 07 91
Fax 235 07 78
Chamber of Trade and Commerce of the Principality of Liechtenstein
Zollstrasse 23, 9494 Schaan
Liechtenstein
Tel: (+423) 237 77 88
Fax: (+423) 237 77 89
E-mail: gwk@gwk.li
Internet: www.gwk.li
Liechtenstein Investment Fund Association (LAFV)
Herrengasse 21 A
P.O. Box 1507
9490 Vaduz
Liechtenstein
Tel: (+423) 791 07 91
E-mail: info@fondsverband.li
Internet: www.lafv.li
Key Stats
Country Description
Official name: Principality of
Liechtenstein. German is the national and official language. English is
widely spoken in business.
Population (May 2005)
34,500 of which about 34 % are foreigners, mainly Swiss, Austrians and Germans.
Capital: Vaduz
Currency: Swiss franc. US$1 = Sfr1.24 Swiss franc (September 2005)
Legal System
Liechtenstein law incorporates aspects of both
Swiss and Austrian law with variations. The court system consists of a
district court (Landgericht), a court of appeals (Obergericht), and a
supreme court (Oberste Gerichtshof). The State Court deals with rights
under the constitution and decides on conflicts of jurisdiction between
the law courts and the administrative authorities. The State Court also
acts as a disciplinary court for members of the government. Criminal
cases first go through the regional court, made up of a magistrates
court, the criminal court and the juvenile court.
Government
The principality is a constitutional, hereditary
monarchy with representative democracy through a parliament. The 1921
constitution introduced the concept of two 'sovereigns': the people and
the reigning prince. Both sovereigns, the people and the prince, have
to agree on important decisions like a change of the constitution, a
new law, the formation of the government or the appointment of the
judges. The prince is head of state and may introduce bills to be
considered by parliament. On 15 August 2004, Liechtenstein's
ruler, prince Hans-Adam II, turned over the day-to-day running of the
principality to his eldest son, Alois, who has the authority to dismiss
governments, veto new laws and cast the deciding vote for appointing
judges. The parliament (Landtag) is made up 25 deputies elected for a
four-year term by proportional representation in two multi-seat
constituencies (the 15-seat Oberland and the 10-seat Unterland). Under
the constitution, government is a collegial body consisting of five
ministers including the prime minister. Each minister has an alternate
minister. The prime minister, ministers and their alternates are
appointed by the reigning prince on the recommendation of parliament.
The constitution allows citizens the right to call a referendum (backed
by a specified number of signatures collected within a time limit)
whenever parliament takes a decision on a new law or on a change of the
constitution. Voters also the right of initiative on introducing a new
law or changing the constitution by collecting a specified number of
signatures within a time limit. Parliament must then decide during its
next session if it accepts or rejects the initiative. If parliament
rejects the initiative a popular vote must be held on the initiative to
determine whether it is accepted or not.
Executive
Reigning Monarch and head of state: Prince Hans Adam II
Prince Alois: Reigning Monarch's Representative (appointed 15 August
2004 to take over day-to-day running of government)
Politics: In the elections of March 2005 the the Fortschrittliche
Bürgerpartei (FBP) won 12 seats (with 48.7% of the vote), the
Vaterländische Union (VU) won 10 seats (38.2%) and the Freie Liste (FL)
three seats (13%). The government is formed by the FBP. The next
election is due to be held in 2009).
Economy
Manufacturing accounts for about 45% of GDP and
services 55%. About 40% of exports go to European Union countries.
Switzerland accounts for an additional 12% of exports. The financial
services sector employs about 2,000 people and accounts for about 30%
of government revenues.
Inflation Rate
0.6% (2003)
Labour Force: Unemployment: 2.2% (2004). 35% of the resident
population and more than 60% of the working population are not
Liechtenstein citizens, most coming from EU countries
Government Accounts (2001)
Revenues: Sfr804.1 million. Total expenditures: Sfr751.4 million.
Public Holidays (2005)
1 January (New Year's day); 2 January
(St Berchtold's Day); 6 January (Epiphany), 2 February (Candlemas); 15
February (Shrove Tuesday); 19 March (St Joseph's day); 25 March (Good
Friday); 28 March (Easter Monday); 1 May (Labour day); 5 May (Ascension
Day); 15 May (Whit Sunday or Pentecost); 16 May Whit Monday); 26 May
(Corpus Christi); 15 August (Assumption); 8 September (Nativity of Our
Lady); 1 November (All Saints' day); 8 December (Immaculate
Conception); 24 December (Christmas Eve); 25 December (Christmas day);
26 December (St. Stephens day); 31 December (New Year's eve).
Time Zone
GMT+1. The clock goes forward one hour at 1:00 on the
last Sunday in March and back to normal time at 1:00 on the last Sunday
in October.
Restaurant Guide
We recommend:
Restaurant Torkel
Rolf and Edith Berger
Hintergasse 9
FL-9490 Vaduz
Tel: +423 232 44 10
Fax +423 232 44 05
Email: office@torkel.li
Click here to learn more about The Sovereign Society's "Liechtenstein Report"
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