LIECHTENSTEIN Trends and Developments Contributed by: Hannes Arnold and Christina Pointner, Gasser Partner
Introduction Liechtenstein is located at the heart of Europe, bor - dered by Switzerland and Austria. The Principality offers a distinctive combination of geographic prox - imity, political stability and deep financial expertise that few jurisdictions can match. Today, Liechten - stein stands as one of Europe’s most established and respected financial centres. With around 40,000 residents and the highest GDP per capita in the world, the Principality combines the ways of a small jurisdiction with genuine economic depth. Industry accounts for roughly 40% of GDP, which is unusually high by European standards, while a sophisticated financial services sector complements this manufacturing strength. This combination pro - vides the foundation for the country’s enduring sta - bility and innovation. Liechtenstein is a constitutional hereditary monar - chy on a democratic and parliamentary basis, where state power is vested jointly in the Reigning Prince, as the Head of State, and the People. The Parliament ( Landtag ) consists of 25 members elected by propor - tional representation for four-year terms. The Land- tag proposes laws, and the government, a collegial body of five ministers including the Prime Minister, is responsible for day-to-day administration. Liechten - stein has pronounced direct democratic rights, where citizens may launch a referendum to put parliamentary decisions to a popular vote or initiate constitutional amendments. For a law to enter into force, it must be approved by both Parliament and sanctioned by the Reigning Prince, reflecting the dualistic principle of shared sovereignty. Liechtenstein is a civil law jurisdiction with strong his - toric ties to Austria and Switzerland and their respec - tive legal traditions. The cornerstone of civil law is the General Civil Code ( Allgemeines bürgerliches Gesetz- buch , ABGB), adopted from the Austrian model and in force since 1812. Key procedural laws, including the Code of Civil Procedure (ZPO), the Jurisdiction Act (JN) and the Execution Code (EO), are also derived from Austrian law. By contrast, property law is based on the Swiss model, and company law is governed by the Persons and Companies Act ( Personen - und Gesellschaftsrecht , PGR), which draws heavily on
Swiss corporate law. Employment law and social security law likewise follow the Swiss model. The Liechtenstein judicial system is organised into three main branches. The first is the ordinary jurisdic - tion for civil and criminal matters, operating through a three-tier court system. The second branch com - prises the administrative courts, with the Adminis - trative Court ( Verwaltungsgerichtshof ) as the highest administrative tribunal. The third branch is the con - stitutional jurisdiction, exercised exclusively by the Constitutional Court ( Staatsgerichtshof ). This court serves as an extraordinary court of appeal and may be petitioned against final decisions for alleged vio - lations of constitutional rights, rights guaranteed by the European Convention on Human Rights, or rights under the European Economic Area Treaty. All courts are located in Vaduz. Liechtenstein has long been a premier destination for private banking and wealth management. The prin - cipality’s banks collectively manage over CHF500 billion in client assets, with net new money inflows of CHF17.6 billion recorded in 2024 alone. The fund sector has experienced remarkable growth, with assets under management reaching CHF117.8 billion in 2024 – an increase of nearly 70% over three years. Asset management companies further contribute to this ecosystem, overseeing CHF54.2 billion in client assets. Political and economic stability underpin this success. Liechtenstein maintains a AAA rating from Standard & Poor’s, while its banks boast an average Tier 1 capital ratio of approximately 20% – well above the European average of 17.5% and placing them among the best- capitalised institutions in Europe. These fundamentals make Liechtenstein highly attractive to fund manag - ers, family offices and wealth management profes - sionals seeking a secure and efficient domicile. Liechtenstein occupies a unique position at the cross - roads of two major economic spheres. It has main - tained a customs union with Switzerland since 1923 and shares the Swiss franc as its currency. Since 1995, it has also been a member of the European Economic Area, giving Liechtenstein-based service providers passporting rights across the EU single market. This
592 CHAMBERS.COM
Powered by FlippingBook