LIECHTENSTEIN Law and Practice Contributed by: Hannes Arnold, Thomas Nigg, Christina Pointner, Sebastian Auer, Johannes Sander, René Saurer and Marta Baftiaj, Gasser Partner
ment for persons subject to unlimited tax liability. This is of practical importance for employers, as they must ensure the organisational handling of payroll, with - holding tax deductions and remittance. In addition, social security contributions are payable. The Liechtenstein social security system comprises the state pension scheme with age and survivors’ insurance (AHV), disability insurance (IV), the family compensation fund (FAK) and unemployment insur - ance (ALV). For employed persons, contributions are shared: the contributions payable are divided between the employee and the employer; the employee’s share amounts to “4.700% of the relevant gross wage” and the employer’s share to “7.191%”. In practice, contri - butions are processed by the employer: the employer withholds the employee’s contributions and remits them. 5.2 Taxes Applicable to Businesses The principal taxes applicable to companies doing business in Liechtenstein are corporate income tax ( Ertragssteuer ) and, if applicable, real estate capital gains tax ( Grundstücksgewinnsteuer ). A legal entity is subject to unlimited tax liability on its entire income if its registered seat or place of effective management is located in Liechtenstein. Legal entities without a domestic seat or place of effective manage - ment are subject to limited tax liability only in respect of domestic connecting factors. Corporate income tax is levied at a flat rate of 12.5% on taxable net income. Liechtenstein does not levy a general withholding tax on dividends or interest. There is no value added tax (VAT) in the traditional sense; instead, Liechtenstein applies Swiss VAT law by virtue of the Customs Treaty with Switzerland, currently at a standard rate of 8.1%. Transfer taxes are not levied as a separate category, though real estate transactions are subject to the real estate capital gains tax. As of 1 January 2024, Liechtenstein introduced glob - al minimum taxation for large enterprise groups in accordance with the GloBE Model Rules of the OECD/ G20 Inclusive Framework on Base Erosion and Profit
Shifting (IF on BEPS). Liechtenstein has implemented a qualified domestic minimum top-up tax (QDMTT), and the existing safe harbour mechanisms for jurisdic - tions applying a QDMTT remain unchanged. The current rules contain various safe harbour mech - anisms that offer the enterprise groups concerned administrative simplifications. In early 2026, these provisions were comprehensively updated by the IF on BEPS, necessitating a corresponding amendment of the national legal framework, the GloBE Act ( Mind- estbesteuerungsgesetz ). The revision comprises in particular the new Side-by- Side Safe Harbour, which provides a broad exemp - tion for enterprise groups with a US parent entity on the basis of US controlled foreign company rules. In addition, high-tax countries are afforded a simplified means of demonstrating compliance with the effec - tive minimum tax rate (Simplified ETR Safe Harbour). 5.3 Available Tax Credits/Incentives Liechtenstein offers a relatively low-tax, broad-based, and internationally compatible tax system rather than a wide range of traditional tax credit or incentive regimes. One of the key tax relief mechanisms is the partici - pation exemption (participation deduction), which exempts income derived from qualifying sharehold - ings from corporate income tax. This provision codi - fies the participation exemption that had previously been granted in practice. Notably, there are no mini - mum holding period or minimum ownership require - ments. As a result, all dividend distributions received by a corporate taxpayer in its capacity as a share - holder are exempt from corporate income tax. For private wealth holding structures, Liechtenstein provides the Private Asset Structure ( Privatvermö- gensstruktur ; PVS) regime. Upon application, a legal entity may qualify as a PVS, provided that it does not carry out any economic or commercial activity in pur - suit of its purpose. A qualifying PVS is subject only to the minimum annual corporate income tax, currently CHF1,800, and is not subject to ordinary tax assess - ment.
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