LIECHTENSTEIN Law and Practice Contributed by: Andreas Schurti and Simon Oberhofer, Schurti Partners Attorneys at Law Ltd
for the assumption of irregularities, there might be no in-person tax audit for decades. Value Added Tax Regular audits are conducted in relation to the value added tax. In practice, there is a cycle of about five years. Private Asset Structures The tax authority verifies whether the conditions for the granting of the status of Private Asset Structure are fulfilled ie, no commercial activities (see 2.3 Spe- cial Incentives ). There is currently a cycle of about three to five years. Rules of Tax Audits Liechtenstein law does not outline the specifics and frequency of the audit process. Entities must complete a tax return annually and are obliged to provide the tax authority with the request - ed information and documents. The tax authority’s assessment is based on these documents and infor - mation, and on any other subsequently requested documents or explanations. The tax authority may also call in experts, carry out inspections, request informa - tion or certificates from the entities, and inspect their books. The assessment is concluded with a decision of the tax authority, which can be appealed to the Tax Commission and the Administrative Court. 9. BEPS 9.1 Adoption of BEPS Recommendations Multilateral Instrument On 7 June 2017, Liechtenstein signed the Multilateral Convention to Implement Tax Treaty Measures to Pre - vent Base Erosion and Profit Shifting (MLI). Implemented BEPS Standards Liechtenstein has implemented the minimum stand - ards and amended double taxation agreements to counter treaty abuse. In accordance with the MLI, Liechtenstein has implemented the following: • BEPS Action 5 (Counter Harmful Tax Practices and Patent Boxes);
• BEPS Action 6 (Prevention of Treaty Abuse); • BEPS Action 13 (Country-by-Country Reporting); and • BEPS Action 14 (Dispute Resolution Mechanism). Liechtenstein has implemented the Global Anti-Base Erosion (GloBE) minimum taxation of 15% (Pillar Two) as of 1 January 2024. The implementation will take place through the Liechtenstein GloBE Act, which fol - lows the OECD standards and provides the legal basis for the levying of the top-up tax. Non-Implemented BEPS Standards However, Liechtenstein has reserved the right not to apply the following MLI articles: • Article 3 (Transparent Entities); • Article 4 (Dual Resident Entities); • Article 8 (Dividend Transfer Transactions); • Article 9 (Capital Gains from Alienation of Shares or Interests of Entities Deriving their Value Principally from Immovable Property); • Article 10 (Anti-abuse Rule for Permanent Estab - lishments Situated in Third Jurisdictions); • Article 11 (Application of Tax Agreements to Restrict a Party’s Right to Tax its Own Residents); • Article 12 (Artificial Avoidance of Permanent Estab - lishment Status through Commissionnaire Arrange - ments and Similar Strategies); • Article 13 (Artificial Avoidance of Permanent Establishment Status through the Specific Activity Exemptions); • Article 14 (Splitting-up of Contracts); and • Article 15 (Definition of a Person Closely Related to an Enterprise) in its entirety. 9.2 Government Policy and Objectives Approach Government Policy Liechtenstein fully supports the BEPS project, which essentially provides for the taxation of profits in the jurisdiction where the value was generated, and has implemented the MLI and the minimum standards accordingly (BEPS Actions 5, 6, 13 and 14). The gov - ernment focuses on Pillar One and Pillar Two, and the following issues in particular: • patent boxes (abolished as of 1 January 2017);
270 CHAMBERS.COM
Powered by FlippingBook