LIECHTENSTEIN Law and Practice Contributed by: Thomas Plattner and Fabian Jenny, Ospelt & Partner Attorneys at Law Ltd.
1.4 Pre-Immigration and Exit Planning Liechtenstein does not levy an exit tax. Unlimited tax liability simply ends on the day a taxpayer relocates their residence or habitual abode abroad, and the ordinary income and wealth tax liability ceases from that date without any deemed disposal of assets or claw-back of pre-departure appreciation (Article 7 Abs 2 lit a, SteG). Individuals leaving Liechtenstein therefore do not need to plan around a domestic exit charge, although the tax consequences in the receiv - ing jurisdiction must always be considered separately. For individuals moving into Liechtenstein, unlimited tax liability begins on the day residence or habitual abode is taken up (Article 7 Abs 1 lit a, SteG). For wealth tax purposes, the fair market value of the tax - payer’s assets is determined as at the beginning of the tax liability, not by reference to historical acquisi - tion cost (Article 12 Abs 1, SteG). This gives incoming residents a clean valuation basis for the wealth tax and, combined with the absence of a capital gains tax on private assets, means that pre-existing unrealised appreciation is not taxed on arrival and requires no formal step-up mechanism. Pre-immigration planning in Liechtenstein therefore centres less on avoiding a domestic charge and more on timing and eligibility for the lump-sum taxation regime ( Besteuerung nach dem Aufwand ) described in 1.3 Income Tax Planning . Access to that regime requires, among other things, that the individual has not been resident in Liechtenstein for at least the pre - ceding ten years, holds no Liechtenstein citizenship and pursues no gainful activity in the country (Article 30 Abs 1, SteG). Individuals who might benefit from this treatment should therefore plan the timing of any prior stays in Liechtenstein, and structure foreign shareholdings, trusts and foundations before relocat - ing, so as to preserve eligibility and to align the report - ing position of foreign structures with the disclosure expected under the application procedure (Article 30 Abs 2, SteG). Because Liechtenstein neither taxes capital gains nor levies gift or inheritance tax (see 1.1 Tax Regimes and 2.6 Transfer of Assets: Vehicle and Planning Mech- anisms ), advisers most often focus pre-immigration work on the client’s country of origin, where an exit
tax, a deemed disposal rule or a lengthy post-emi - gration tail of tax liability may apply. Realising gains, restructuring shareholdings or settling assets into a foundation or trust before relocating to Liechtenstein should always be tested against the departure rules of the client’s current jurisdiction, since Liechtenstein imposes no comparable barrier of its own. 1.5 Taxation of Real Estate Owned by Non- Residents and Non-Citizens Taxation of Real Estate of Non-Residents Non-residents are subject to limited tax liability on their domestic assets, including real estate and domestic income. Real Estate Gains Tax Profits on the sale of real estate located in Liechten - stein are taxable under the real estate gains tax. The transfer of a property by forced sale or expropriation and the economic change of ownership of a prop - erty, the encumbrance of a property with easements and the transfer of participation rights in legal entities whose main purpose is the acquisition, ownership, management and sale of real estate are considered to be equivalent to a sale. The seller is liable for real estate gains tax. Taxation basis The proceeds exceeding the investment costs are deemed to be the gain on real estate. The purchase price including all other payments by the purchaser shall be deemed to be the proceeds of the sale. If a property is transferred by forced sale or expropria - tion, the proceeds of the auction or the compensation amount shall be deemed to be the proceeds of the sale. Losses incurred by the taxpayer on the property in previous years may be deducted from the gain on the property, provided such losses were not covered by insurance benefits. In the case of an exchange of immovable property, the difference between the mar - ket value of the property received (asset value and premium) and the investment costs of the property given up is deemed to be a gain on real estate. Investment costs are deemed to be the official esti - mated tax value at the time of sale, increased by the purchase price, to the extent that it exceeds the tax
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