LIECHTENSTEIN Law and Practice Contributed by: Thomas Plattner and Fabian Jenny, Ospelt & Partner Attorneys at Law Ltd.
1. Tax 1.1 Tax Regimes Personal Income Tax
Inheritance Tax Liechtenstein levies neither gift nor inheritance tax. Trusts and Private Foundations Private foundations are legal persons under Liechten - stein tax laws. Trusts with legal personality ( Treuun- ternehmen ) are also legal persons. Both are subject to corporate income tax like other companies and investment funds. In general, the corporate income tax for all legal entities domiciled in the Principality of Liechtenstein is 12.5% of taxable net income with a minimum tax of CHF1,800 per year. Trusts without legal personality are not subject to corporate income tax. Private Asset Structure (PAS) The status of a PAS can be granted to legal persons who, in the pursuit of their objective, do not perform any commercial activity (such as renting or lending), in particular if they exclusively acquire, hold, manage and sell bankable assets according to the Liechten - stein Assets Management Act and participations in legal persons, liquid funds and bank balances. The PAS may only hold participations in companies if it can be proved that the shareholders or beneficiaries do not exercise actual control over the management of these companies through direct or indirect influ - ence. The articles of incorporation of a PAS must indi - cate that they are subject to the restrictions applying to a PAS under the Tax Act of Liechtenstein. Investors of a PAS can only be natural persons acting within the context of management of their private assets, an asset structure acting exclusively in the interests of the private assets of one or more natural person or an intermediary for one of these mentioned persons. A PAS only pays the annual minimum corporate income tax of CHF1,800. 1.2 Exemptions Exemptions From Wealth Tax/Property Tax Exempted from wealth tax are: • the taxpayer’s household content and personal content; • privately used motor vehicles with a value under CHF25,000 (single taxpayer)/CHF50,000 (jointly taxable spouses);
Individuals residing in Liechtenstein have unlimited tax liability with their global property and income to prop - erty and income tax. Individuals neither domiciled nor habitually resident in Liechtenstein are subject to lim - ited tax liability on their domestic assets and domestic income. The tax liability commences on the day on which the taxpayer: • takes up residence in Liechtenstein or makes Liechtenstein their place of habitual abode (unlim - ited tax liability); or • has assets (real estate and domestic permanent establishments) in Liechtenstein or generates earn - ings in Liechtenstein (limited tax liability). Tax Rate The national income tax is calculated based on the taxable income. The first CHF15,855 of a single per - son’s income are exempt from income taxation (basic allowance). The national income tax is progressive and ranges from 1% (on income from CHF15,856 to CHF21,140) to 8% (on a single person’s annual income from CHF211,401; Article 19, paragraph 1, letter a, SteG). In addition, a municipal surcharge is levied, determined annually as a percentage of the national tax; it may not fall below 150% and may not exceed 250% (Article 75, paragraph 3, SteG). A vari - ety of expenditures are tax deductible. Wealth Tax In addition to income tax, Liechtenstein levies a wealth tax or property tax ( Vermögenssteuer ). A notional yield ( Sollertrag ) of 4% on the fair market value of the taxpayer’s total movable and immovable assets is treated as deemed income and taxed together with the taxpayer’s other income; the government reviews the adequacy of this rate every four years (Article 5, SteG). Securities with a quoted price held by a natural person have the considered value on the basis of the quoted price.
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