LIECHTENSTEIN Law and Practice Contributed by: Hannes Arnold, Thomas Nigg, Christina Pointner, Sebastian Auer, Johannes Sander, René Saurer and Marta Baftiaj, Gasser Partner
5.4 Tax Consolidation Liechtenstein also provides for a tax group regime (group taxation). Under this regime, affiliated legal entities may form a tax group, allowing losses incurred by one group member during a tax year to be off - set against the profits of other group members in the same year. In practice, the primary purpose of the group taxation regime is to facilitate the intra-group utilisation of tax losses. A tax group consists of a group parent and one or more group members. The group parent must be subject to unlimited corporate income tax liability in Liechtenstein and must hold a qualifying participation in the group member(s). 5.5 Thin Capitalisation Rules and Other Limitations In Liechtenstein there is no traditional thin capitali - sation regime based on a fixed debt-to-equity ratio. Instead, the main limitation is based on the arm’s length principle and the tax treatment of excessive or non-arm ‘s length remuneration on debt financing. 5.6 Transfer Pricing Transfer pricing rules expressly apply in Liechten - stein. Article 49 of the Tax Act (SteG) codifies the arm’s length principle. Where income or expenses arising from transactions with related parties or per - manent establishments are affected by conditions that are not at arm’s length, taxable net income must be determined as if the transactions had been carried out between independent parties. This constitutes the principal statutory basis for transfer pricing adjust - ments in Liechtenstein. 5.7 Anti-Evasion Rules Liechtenstein has a general anti-evasion rule in its Tax Act. Article 3 of the Tax Act ( Steuergesetz ) cov - ers arrangements that are inappropriate in light of the underlying economic circumstances and whose sole economic purpose is to obtain tax advantages. An arrangement is considered abusive where grant - ing the tax benefit would be contrary to the purpose and intent of the Tax Act, and the taxpayer cannot demonstrate any commercial or other significant non- tax reasons for the arrangement. The consequence is the application of the substance-over-form principle:
where an abuse is found, taxes are assessed as they would have been under a legal structure that appro - priately reflects the underlying economic transactions, facts and circumstances. 5.8 Tariffs Liechtenstein is closely integrated with Switzerland for customs purposes. Under the Treaty on the Acces - sion of the Principality of Liechtenstein to the Swiss Customs Territory (Customs Treaty), Swiss customs and indirect tax legislation applies in Liechtenstein. For businesses, this means that import and export matters are generally governed by the Swiss customs system and should be assessed in accordance with Swiss customs law. Accordingly, when assessing the highest or most com - monly applied customs duties, the relevant framework is not an independent Liechtenstein customs policy but rather the Swiss customs tariff and trade regime, insofar as it applies to Liechtenstein under the Cus - toms Treaty. Liechtenstein has no separate national merger con - trol statute and no domestic turnover or market-share notification thresholds. From a competition law per - spective, mergers and acquisitions in Liechtenstein are governed by the EEA Agreement, implemented domestically by the Liechtenstein EEA Competition Implementation Act. The main legal basis for EEA merger control is Arti - cle 57 of the EEA Agreement, applied together with Annex XIV to the EEA Agreement, Protocol 21 to the EEA Agreement on the implementation of competi - tion rules applicable to undertakings, and Protocol 24 to the EEA Agreement on cooperation in the field of control of concentrations. 6. Competition Law 6.1 Merger Control Notification The transaction types covered are those qualifying as a “concentration” under Article 3 of Council Regula - tion (EC) No 139/2004, namely mergers, acquisitions of direct or indirect control, and full-function joint ven - tures. The concept is based on a lasting change of
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