Liechtenstein: Offshore Legal and Tax Regimes
Tax Treatment of Offshore Operations
See Domestic Corporate Taxation for the general principles of Liechtenstein taxation; these apply to offshore entities unless otherwise mentioned.
Under the old tax law, prior to January 2011, 'offshore' ('low tax' would be a better expression) entities were taxed as follows (and may elect to be taxed in the same way until 2014):
- Holding and domiciliary companies (often called exempt companies) do not pay profits or property tax; the net worth tax of 0.1% of taxable capital subject to a minimum of CHF1,000 is due under the old regime. This tax is payable annually, in advance. Holding or domiciliary status precludes a company from taking advantage of the double tax treaty with Austria, unless 51% of its capital is held by Liechtenstein citizens.
- The Establishment (Anstalt) is taxed on the same basis as holding and domiciliary companies, if it has similar types of activity. Stamp duty is reduced to 0.5% for capital exceeding CHF5m, and 0.3% for capital exceeding CHF10m.
- The Foundation (Stiftung) and the Trust are taxed on the same basis as holding and domiciliary companies, but the rate of tax is 0.075% if capital is between CHF2m and 10m, and 0.05% if capital is over CHF10m. Payment to non-resident beneficiaries of a Stiftung or Trust are free of withholding tax. Family foundations pay a reduced rate of stamp duty of 0.2% on their formation capital.
- Non-resident companies, which are companies active only outside Liechtenstein, even though they may have a Liechtenstein headquarters (not always easy to distinguish from domiciliary companies) are taxed in the same way as holding and domiciliary companies; income remitted to Liechtenstein may be taxable, however.
The new Tax Act 2010, provides for a transitional period of three years from the coming into force of the Act on January 1, 2011. During these three years domicillary and holding companies may elect to be taxed under the old Act or amend their status so as to be taxed in accordance with the new Tax Act. All companies electing to be taxed under the new Act are subject to an alternative minimum tax of CHF1,200 payable annually in advance.
A tax of 1% of capital up to CHF5m is payable upon formation of a business. The rate is reduced to 0.5% for capital above CHF5m but below CHF10m and 0.3% for capital above CHF10m.