LIECHTENSTEIN Law and Practice Contributed by: Alexander Ospelt, Lukas-Florian Gilhofer, Vivianne Auer and Laura Bayer, Ospelt & Partner Attorneys at Law Ltd
• EUR3.7 million or the equivalent in Swiss francs for life insurance companies, including captive direct insurance companies; and • EUR3.6 million or the equivalent in Swiss francs for reinsurers, with the exception of captive reinsurers, for which a minimum capital requirement of at least EUR1.2 million or the equivalent in Swiss francs applies.Evidence that the company will be able to hold eligible own funds to cover the Solvency Capital Requirement. • Evidence that the company will be able to hold eligible basic own funds to cover the Minimum Capital Requirement. • The identity and amount of investment of the shareholder(s), whether direct or indirect, whether natural or legal persons who have qualifying hold- ings in that undertaking or who can influence the company by other means, such as strong linkages. Article 3 of the VersAG provides relief in terms of certain requirements to operate a so-called “small” insurer, and the extent to which the VersAG applies to small insurers is governed by Article 4. 2.3 Taxation of Premium The Swiss Federal Stamp Duty Act also applies in Liechtenstein. As a result, stamp duty on premium payments (insurance premium tax (IPT)) is levied on insurance policies that are part of the domestic port- folio of a domestic (Liechtenstein or Swiss) insurer or that a domestic policyholder has taken out with a foreign insurer that is not subject to supervision in Switzerland or Liechtenstein. IPT is payable either by the domestic insurer or, if there is no domestic insur- er involved, by the domestic policyholder, who will then have to declare and pay the stamp duty. The IPT amounts to 5% on the cash premium (2.5% on the cash premium for life insurance), and the levy claim arises with payment of the premium. Premium payments for certain personal insurance policies, such as life insurance policies with periodic premium payments, as well as for certain health, acci- dent, disability and unemployment insurance policies, are exempt from the levy.
Reinsurance is tax exempt. Reinsurance premium payments therefore do not attract IPT. Liechtenstein, aligned with Swiss VAT rules, treats insurance services as VAT-exempt. The IPT thus func- tions as the primary indirect tax on insurance activity. Overall, the regime distinguishes clearly between direct insurance, subject to IPT unless exempt, and reinsurance, which remains outside the scope of pre- mium taxation. 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers The domestic activities (in Liechtenstein) of foreign insurers are explicitly regulated by the Insurance Supervision Act (Article 112 et seq of the VersAG) and are therefore also subject to regulatory requirements and supervision. Direct insurers domiciled in another EEA Member State may establish a branch in the Principality of Liechtenstein according to the passporting/notifica- tion system within the EEA. Third-country insurers require a licence under the VersAG in order to take up insurance activities in Liechtenstein. Third-country insurers must obtain a permit in accord- ance with the VersAG to commence insurance activi- ties in Liechtenstein. A third-country insurer may only be granted a licence to take up insurance activities in Liechtenstein if it meets the requirements set forth in Article 117 of the VersAG. Liechtenstein and Switzerland mutually recognise the supervision system and introduced a passporting/ notification system comparable with the system within the EEA. As a result, Liechtenstein offers the unique opportunity to insurance companies and insurance intermediaries to provide cross-border services to the EEA and Switzerland without having to obtain addi- tional licences. The mutual recognition does not cover (pure) reinsurance, as this business is, in any case, exempt from authorisation requirements between the two jurisdictions.
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