Liechtenstein Introduction
Liechtenstein's
economic policy encourages information technology
operations. There are already a number of
Internet Service Providers in Liechtenstein,
and clear interest is being shown in e-commerce
development. The main telecommunications
company is Liechtenstein Telekom and major
ISPs are .com.li, Creativemedia AG and EUnet
AG.
In January 2002 the Government and the Princely
House launched their own Internet Portal.
According
to the Head of Government, Otmar Hasler,
the new web site is designed to be a common
internet platform for the Princely House
and the State, Economy, Culture, Sports,
and Tourism departments of the Government.
Speaking
at the launch of the new site, he explained
that the intention was to present the principality:
'in all its political, economical, cultural,
historical and tourist aspects' to a global
audience.
See
below for specific information on e-commerce
in Liechtenstein, or Offshore-e-com.com
for an extensive analysis of the commercial
possibilities and the legal background.
Liechtenstein Offshore
Activities
The natural bonding of the Internet and
Offshore stems from the fact that both,
of their nature, manage to avoid tax. Businesses
which can operate on the Internet without,
so to speak, touching ground in a high-tax
jurisdiction will naturally migrate to offshore
jurisdictions; while business that already
have offshore existence will find it highly
convenient to be able to use the Internet
to trade with their high-tax customers without
having to make a landing in their countries.
By
locating websites in offshore jurisdictions
to carry out functions previously based
in high-tax jurisdictions such as sales
and marketing, treasury management, supply
of financial services, and most of all,
the supply of digital goods such as music,
video, training, software etc, businesses
can take advantage of low rates of taxation
for increasingly substantial parts of their
operation.
In
many countries, the distribution of goods
from a warehousing facility does not constitute
the carrying on of a trade or business in
that jurisdiction, so that even for physical
goods, in many case it will be possible
to avoid a permanent establishment (taxable
presence) altogether in many high-tax jurisdictions
where trading activities currently take
place.
When
it comes to considering the future of Liechtenstein
as an e-commerce centre, however, the position
is not as simple as it is for out-and-out
offshore jurisdictions, because the 'offshore'
or 'low-tax' sector of the Liechtenstein
economy, based on the 'holding' and 'domiciliary'
company status, and on the special corporate
forms of the establishment and the foundation,
sits within a normal, moderately-taxed economy
(see Offshore
Legal and Taxation Regimes). In
fact, most of the low-tax forms are specifically
prohibited from local commercial and business
activity, allowing only the holding of investments
and related financial activity (this is
defence of local, normally-taxed businesses).
It
is not quite clear whether processing of
international sales and distribution activity
through a local server would be permitted
to domiciliary companies - perhaps so, in
which case Liechtenstein would be a favourable
location for such businesses.
The
situation is somewhat clearer for collective
investment funds, since they can use e-commerce
to market shares or units out of Liechtenstein
without compromising their tax-exempt status.
For banks, again, the situation is less
clear.
As
a major 'low-tax' jurisdiction with tens
of thousands of enterprises already installed,
including many collective investment funds,
banks and other financial institutions,
Liechtenstein certainly has the opportunity
to become a centre of e-commerce activity.
The country's geographical location, its
good telecommunications links and its sophisticated
business infrastructure add to its suitability
as an e-ntrepot.
This
has begun to be recognised by the government.
Not wishing to be left behind in the race
to become a major player in the new economy,
the lawmakers of Liechtenstein are to introduce
legislation that will allow electronic signatures
to be legally valid in the principality.
The laws are largely adopted from the European
Union's guide-lines for electronic signatures.
The legislation, which will strengthen Liechtenstein's
position in international e-commerce competition,
will make electronic signatures just as
legal as hand-written signatures and give
them recognition in the entire EEA area.
The
government believes this move will encourage
more electronic transactions as both the
public and private sectors' confidence in
Internet security rises.
Furthermore,
internet access in Liechtenstein will also
be encouraged, as Prime Minister Mario Frick
has announced that telecommunication networks
and services will be deregulated and liberalised
to a greater extent than they are currently.
This means that the protection that LTN
Liechtenstein TeleNet AG now enjoys will
cease, but the company says it is eager
to compete and is interested in providing
a complete range of services.
For
information about the impact of e-commerce
on a number of the main activities that
take place offshore, click
on a link below to go to our specialist
E-commerce site Offshore-e-com.com
Sales and Distribution of Physical Products
Sales
and Distribution of Digital Products
Banking
and Financial Services (including Investment
Funds)
Corporate
Support Functions
To
see an analysis of the current state of
legal and tax issues surrounding offshore
e-commerce, click
here.
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Liechtenstein
Case Studies
This section will contain case studies of
e-commerce solutions applied to offshore
business activities carried out from Liechtenstein.
To be kept updated as to our progress click
here.
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