LIECHTENSTEIN Law and Practice Contributed by: Thomas Plattner and Fabian Jenny, Ospelt & Partner Attorneys at Law Ltd.
ment for the purposes established by the founder in the articles of association and bylaws. It is generally incumbent upon the board of directors to manage the establishment’s business and to represent the estab - lishment towards third parties. The purpose of an establishment can be of an eco - nomic or non-economic nature and it can be in any legally permissible form, eg, trade in goods, acquisi - tion of participations, financing, management of real estate, management of assets for specific beneficiar - ies or for purely charitable purposes. The purpose of the establishment must be lawful and reasonable. The capital can be specified in Swiss francs, euros or US dollars. The minimum nominal capital is CHF30,000.00, EUR30,000 or USD30,000. If the establishment’s capital is divided into shares, it must be at least CHF50,000, EUR50,000 or USD50,000. The formation of the establishment can be in cash or in kind. The minimum capital must have been ful - ly paid up or contributed upon the formation of the establishment. The capital is at the establishment’s free disposal, as soon as it has been entered in the commercial register. 3.2 Recognition of Trusts Trusts are recognised in Liechtenstein (see 3.1 Types of Trusts, Foundations or Similar Entities ). 3.3 Taxation of Trusts, Foundations and Similar Entities Located in Other Jurisdictions Foreign Trusts, Foundations and Similar Entities as Such A trust, foundation or similar entity that is neither seated nor effectively managed in Liechtenstein does not itself become a Liechtenstein taxpayer. Corpo - rate income tax attaches to legal entities only where their registered office or their place of effective man - agement is domestic; a foreign vehicle administered abroad falls outside this scope irrespective of the resi - dence of its settlor, founder or beneficiaries. Attribution to Liechtenstein-Resident Settlors, Founders and Beneficiaries This does not, however, place the vehicle beyond the reach of Liechtenstein taxation. Individuals who are resident or have their habitual abode in Liechtenstein
are subject to unlimited tax liability on their entire worldwide wealth and income. Where such a person acts as settlor or founder of a foreign trust, foundation or similar entity, the same attribution principles that apply to domestic vehicles are engaged: • assets held through a revocable foreign structure are attributed to, and taxed in the hands of, the founder or settlor; and • assets held through an irrevocable foreign struc - ture may, on request by the beneficiary and with the consent of the trustee or foundation council, be taxed as the beneficiary’s own wealth, in which case the foreign vehicle assumes the wealth or income tax liability in place of the beneficiary; absent such an election, the founder or settlor remains taxable. Dedication Tax Where No Election Is Made Where the transfer of assets to a foreign structure results in those assets ceasing to be subject to Liech - tenstein wealth tax, and the resulting benefits or inter - ests are not individually determinable in value, and no election for beneficiary-level wealth taxation has been made, the transferor is instead subject to a dedica - tion tax of 3.5% of the wealth-tax value of the assets transferred. Relief From Double Taxation Double taxation is mitigated where a relevant dou - ble taxation agreement provides for an exemption in respect of assets located, or income arising, in the other contracting state, or where relief is granted on a reciprocal basis. 3.4 Tax Consequences of Fiduciary and Beneficiary Roles Taxation of a Fiduciary Liechtenstein does not levy a separate fiduciary income tax on estate or trust assets as such. Income- producing assets held in a fiduciary capacity – bonds, fund units, rental property, savings accounts and equi - ties among them – are treated as the personal income of whichever taxpayer the assets are attributed to under the applicable attribution rule, regardless of the fact that the income derives from an estate, trust, foundation or similar entity.
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