FDI Strategy

Liechtenstein – Traditional & Innovative

Philipp Kieber, Interadvice Anstalt 24th May 2019

The Principality of Liechtenstein is a constitutional hereditary monarchy based upon democratic-parliamentary principles who celebrates his 300 anniversary this year. The small state is located in the heart of Europe between Austria and Switzerland. It has 37,000 inhabitants, the capital is Vaduz, the official language is German, and the business languages are German and English. Liechtenstein can be reached very easily from different international airports as from Zurich within 1 hour, from Munich and Milano within 2 ½ hours.

The Principality is independent, and following the customs treaty with Switzerland in the year 1923 which includes a currency union and also, has close administrative and economic ties. Liechtenstein is a member of the United Nations (UN) and of the European Economic Area (EEA), although, it is not a member of the European Union (EU). In November 2013, an international convention to prevent tax evasion (“OECD/Council of Europe Convention”) was signed.

Liechtenstein is most known as an offshore place but in fact is one of the most highly industrialised countries in the world with 40% of the gross domestic product (GDP) generated through the industrial sector and only 18% of the GDP of Liechtenstein through financial services. Through its customs treaty with Switzerland and the membership in the European Economic Area (EEA), Liechtenstein and in the country established companies are in a very comfortable economic situation.

When talking about Liechtenstein also the very stable economic and political situation of Liechtenstein has to be mentioned. All over the world states have to deal with political and economic crises. While the Principality can refer to its triple A rating of Standard & Poor’s, which was just reconfirmed in June 2018.

“Through its customs treaty with Switzerland and the membership in the European Economic Area (EEA), Liechtenstein and in the country established companies are in a very comfortable economic situation.”

Other location factors beside the stable social, legal and economic order and the high level of political stability and continuity are the liberal company law, liberal economic policy, good infrastructure, stable Swiss franc as official currency, the little bureaucracy and direct administrative channels. Yes, Liechtenstein is a small country but nice, innovative and successful.

Liechtenstein, a place for business activities, innovative new business models and traditional asset preservation
Liechtenstein succeeds in doing the split being a place for business activities as well as a safe haven for asset preservation over generations. The Liechtenstein Persons and Companies Act (Personen- und Gesellschaftsrecht – “PGR”) and the Trust Enterprise Act (Gesetz über das Treuunternehmen) establish a liberal, flexible statutory framework that is characterised by the spirit of entrepreneurial freedom and facilitates various company forms and asset holders; the trust (Treuhänderschaft) as well as the trust enterprise (Treuunternehmen/Geschäftstreuhand) are also enshrined in law since 1926.

While the stock corporation is an ideal vehicle for commercial activities, foundations are established to pursue common-benefit objectives, holding foundations (succession arrangements for companies) or as family foundations (estate planning, preservation of family assets). The Liechtenstein trust, who reclines on the English common law model, can pursue similar purposes.

Modern Tax Law in Liechtenstein
Profit tax system
Liechtenstein has a profit tax law for legal entities with a tax rate of 12.5% of net earnings which complies with the regulations of the EEA and OECD standards. A number of special aspects are applicable when determining net earnings. As an example, an interest deduction of 4% on operationally necessary equity capital. There are further constellations where the net earnings can be reduced but this is depending from the business model. Liechtenstein has a wide network of over 20 double tax treaty agreements and over 25 tax information exchange agreements with countries in the world.

Private asset structure
Asset management foundations, establishments and fiduciary companies, in accordance with the rules governing private asset structures (Privatvermögensstrukturen – “PVS”), subject to certain preconditions (in particular: no economic activity as well as asset management by an independent professional third party), may choose to be taxed at the minimum income tax rate of CHF 1,800.00 per annum. Trusts are subject exclusively and without further conditions to the minimum income tax rate amounting to CHF 1,800.00 per annum.

Why Interadvice Anstalt?
On the landscape of professional Liechtenstein Trustee Offices, Interadvice Anstalt is not the biggest player but a very old reliable company, which started its activity in 1922 by the great-grandfather of the author and is therefore maybe the oldest Trustee Office in Liechtenstein. Interadvice focuses on the core business of trustee services which is developing tailored and long-term solutions in a specialised team for selected private and business clients as well as strategic partner for Family Offices. The client’s interest has always first priority. We see ourselves as a provider of family office services and solutions.

Thanks to our cooperation and network with law firms and fiduciary offices, asset managers and consultants in a wide variety of countries, we are able to clarify complex questions or to refer clients to precisely the right specialists. This cooperation’s keep us self-independent and the solutions are always in the best interest of the clients.If you are looking for a Trust Company in Liechtenstein which is interested in long term relationships and respectful and efficient cooperation we would like to offer you our services.