Liechtenstein plays an important role in the global banking industry. Its flexible legislation and a beneficial tax system bring significant advantages to companies, trusts, and holdings registered in the jurisdiction. The Principality serves asset protection purposes extremely well.
The Swiss franc is the official currency in Liechtenstein, which is one more advantage that the jurisdiction offers because the franc has been one of the most stable national currencies. Unlike many other tax havens, Liechtenstein does not charge any taxes on interests. Besides, there is no currency control in the Principality.
Banking privacy is protected by law in Liechtenstein. The jurisdiction is considered one of the last standing strongholds in this respect. Tax authorities of foreign countries may be unhappy about it but privacy of personal information is a top priority in Liechtenstein. Banking secrecy is protected there even better than in the neighboring Switzerland.
If you would like to bank in Liechtenstein, please apply for a professional consultation on banking privacy with International Wealth experts. The consultation is free of charge.
Double taxation avoidance agreements
Many countries sign bilateral treaties on avoiding double taxation. This may look fair at the first glance but the truth is that such treaties are used to exchange fiscal information between countries. A treaty on double taxation avoidance is an instrument of fiscal control, as a matter of fact.
The situation is entirely different in Liechtenstein, however. The Principality has no treaties on avoiding double taxation with other countries with one exception only. It has signed such a treaty with Austria and the treaty applies only to the Austrians who live on the border with Liechtenstein and have jobs in the Principality.
Benefits for foreign companies registered in Liechtenstein
The fact that no withholding tax nor tax on interests are charged in Liechtenstein gives local and foreign businesspeople highly beneficial investment opportunities. The investments can be made in any national currency.
Liechtenstein is an offshore center close to perfection. It has extremely liberal and flexible legislation regulating the work of business companies, which allows creating holdings and management companies of various types in Liechtenstein.
In contrast to their Swiss counterparts, trusted agents in Liechtenstein can perform financial operations on behalf of their customers by putting their own signatures at the bottom of the page. This allows keeping the true actor’s name confidential. Trusted agents in Liechtenstein are bound by professional secret agreements and their conscience.
It is rather simple to establish a company in Liechtenstein with the help of a lawyer or a business consultant in a way that allows concealing the identities of true company owners. Besides, a foreign national can own 100% of the shares of a company registered in Liechtenstein. It does not matter if the company is created by a foreign legal entity, a group of foreigners, or even a single foreign national.
Company founders do not have to live in Liechtenstein either. At the same time, all companies shall be managed by authorized local residents, in accordance with the law. For this reason, you will have to find a local lawyer or a business consultant if you want to register a company in Liechtenstein.
Shareholders’ meeting as well as Board of Directors meeting can also be help outside Liechtenstein. The postal service in Liechtenstein closely cooperates with the postal service of Switzerland. Letters are delivered from Liechtenstein to any other European jurisdiction within 2 or 3 days. The most up-to-date telecommunication technologies are readily available in the Principality.
A holding company with a legal address in Liechtenstein has to hold companies that are located in other jurisdictions. If all business activities take place abroad and all income comes from foreign countries, the Liechtenstein-based holding company will have to pay very little in taxes. Moreover, a transportation or a financial company will also find many fiscal advantages in Liechtenstein. The same goes for trade and intermediary companies as well as all sorts of service providers.
Joint-stock companies, trusts, holdings, and other sorts of corporations are exempted from most taxes in Liechtenstein. Only 1% (min. CHF 1,000) ‘capital tax’ is charged in the Principality.
Banking in Liechtenstein
Liechtenstein banks are famous in the global banking industry for their financial efficiency and absolute banking privacy. This is the reason why many large European banks have established dozens of branches there that work in accordance with the local legislation that protects privacy of bank account holders’ information.
Vaduz is a global financial center and it has a highly advantageous geographical location: 250 km to Milan, 250 km to Munich, and 100 km to Zurich.
Since recently, it has become possible to establish banks, insurance companies, and investment funds in Liechtenstein. However, the requirements are tough. This is the main reason why only 15 local banks are found in Liechtenstein today. It is also important to know that a banking license issued in Liechtenstein entitles the holder to provide banking services in all other European countries. All the license holder has to do is inform the authorities of the foreign country that he or she intends to offer banking services on its territory. If you would like to start a bank in Liechtenstein, you have to invest at least CHF 10 million.
The same opportunity is available to insurance companies registered in Liechtenstein. They can also offer insurance services in other European countries by simply informing the local authorities about their intentions.
Being part of the EU, Liechtenstein remains independent in tax regulation notwithstanding the attempts of the European authorities to harmonize tax burdens across the Union.
Overall, Liechtenstein offers beneficial corporate legislation and political and social stability. Its customs agreements with Switzerland and Austria and a single currency with Switzerland contribute to the prosperity of Liechtenstein. Business managers living in Liechtenstein are famous for their professionalism.
Requirements to foreign companies registered in Liechtenstein
The laws that currently regulate corporate activities in Liechtenstein were passed nearly a hundred years ago. Their texts do not contain the expression ‘offshore companies’ but the laws offer advantages to foreign companies that are similar to the advantages offered by offshore jurisdictions. In particular, zero taxes are payable on the income derived outside Liechtenstein.
The minimal required registered capital is CHF 50,000 for a public limited company in Liechtenstein and CHF 30,000 for other types of companies. The minimal number of company founders is one. It can be a natural person or a legal entity. The company founder’s nationality or place of residence do not matter.
Companies engaged in commercial activities shall file tax reports and balance sheets within 6 months after the end of the financial year. It is recommendable to hold General Meetings in Liechtenstein even though it is not necessary. Finally, a company can be re-domiciled to Liechtenstein from another jurisdiction.
Thus, if you start a company in Liechtenstein and open a corporate bank account in the Principality, you can gain substantial fiscal benefits. You should bear in mind, however, that you have to involve a local person in the process of company formation in Liechtenstein.