DOING BUSINESS IN LIECHTENSTEIN IN 2023
Since 2003, Healy Consultants Group has been efficiently and effectively assisting our Clients with i) Liechtenstein business registration ii) business licensing iii) Liechtenstein business banking solutions iv) visa options and staff recruitment strategies and v) workspace rent.
|Compare different Liechtenstein entities||LLC||Offshore company||Establishment||Foundation||Trust||PLC|
|Also known as||GmbH||Offshore-Gesellschaft||Anstalt||Stiftung||Trust Enterprise||AG|
|Best use of company?||All products/ svcs||Manuf/ export trading||Holding/ investment co.||Holding Family assets||Holding company||All products/ svcs|
|How soon to invoice Clients?||4 weeks||5 weeks||4 weeks||4 weeks||Cannot trade||4 weeks|
|How soon can you hire staff?||4 weeks||5 weeks||4 weeks||4 weeks||Cannot hire||4 weeks|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||1 week||Cannot lease||1 week|
|How long to supply corporate bank a/c?||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks|
|How long to supply co. reg / tax numbers?||4 weeks||5 weeks||4 weeks||4 weeks||5 weeks||4 weeks|
|Corporate tax rate on annual net profit for commercial trading entities?||12.5%||12.5%||12.5%||12.5%||0%||12.5%|
|Minimum Corporate tax on annual net profit for non-commercial trading entities?||€1,200||€1,590||€1,590||€1,590||€1,200||€1,590|
|Limited liability entity?||Yes||Yes||Yes||Yes||Yes||Yes|
|Annual trustee required?||No||No||No||Yes||Yes||No|
|Government grants available?||Yes||Yes||Yes||Yes||No||Yes|
|Govt approval required for foreign owners?||No||No||No||No||No||No|
|Res. director/partner/ legal rep. required?||Yes||Yes||Yes||Yes||Yes||Yes|
|Min. paid up share capital?||€30,000||€30,000||€30,000||€30,000||€30,000||€50,000|
|Can bid for Government contracts?||Yes||Yes||Yes||No||No||Yes|
|Corporate bank account location?||Bank Alpinum||Bank Frick||Bank von Ernst||Kaiser Ritter Partner Privatbank||Banque Havilland||Liechtenstein Global Trust Bank|
|Can secure trade finance?||Yes||Yes||Yes||Yes||No||Yes|
|VAT payable on sales to local customers?||7.7%||7.7%||7.7%||7.7%||Cannot trade||7.7%|
|Average total business set up costs?||€33,800||Request a proposal||€22,905||€38,355||€27,150||€24,450|
|Average total engagement period?||2 months||2.5 months||2 months||2 months||2.5 months||2 months|
Liechtenstein company registration summary
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Advantages and disadvantages
Advantages of Liechtenstein company registration
- If properly structured, a Liechtenstein commercial IP-Company enjoys an effective corporate tax rate of 2.5% on net profits from global income relating to patents, trademarks and designs. IP must be registered and protected in an international register. Liechtenstein’s network of tax treaties can help to reduce the withholding tax imposed by third countries;
- A Liechtenstein entity can be a commercial asset management company licensed by FMA and enjoy the following benefits:
- A flat rate of annual corporation tax of 12.5% on net profits;
- Offer and provide its services throughout the EEA and EU thanks to the Markets in Financial Instruments Directive;
- The entity is free of capital gains tax and withholding tax;
- A Liechtenstein entity can receive investment income free of local tax including dividends, royalties, and interest;
- There is a legal tax exemption on profits from foreign permanent establishments, rental income from foreign real estate, dividends and capital gains;
- An Asset Management Company is a legal entity that engages in i) portfolio management and/or ii) provides investment advice.
- Liechtenstein is the smallest and the sole German-speaking nation that does not share a boundary with Germany. The nation has been traditionally known for being Europe’s discreet and efficient financial centre. As a result, it is a promising destination for incorporation of banking and financial services businesses.
Disadvantages of Liechtenstein company registration
- All commercial entities in Liechtenstein require a resident director and a high minimum paid up share capital of at least €30,000. Corporate directors are not allowed;
- For all commercial Liechtenstein entities, annual unaudited financial statements must be submitted to the Tax Authority of Liechtenstein;
- Commercial companies in Liechtenstein require permission to do business, making it difficult to start operations quickly;
- Compared to offshore tax neutral jurisdictions, registering a Liechtenstein entity is expensive. Annual company costs range from €15,000 including Government license fees, accounting and tax fees, and paying for a local director;
- Liechtenstein has a very limited network of double taxation treaties. Consequently, minimizing global withholding tax may be a challenge when extracting funds from subsidiaries located outside of Europe or receiving IP royalties from abroad;
- Some Liechtenstein entities like the Anstalt and Stiftung may not be recognized by global banks, customers and suppliers. This problem is exacerbated by the fact all of the entity’s legal documents are in German;
- Liechtenstein is a small country with less than 40,000 residents. The nation has an extremely low unemployment rate of 1.9%. Therefore, it is often a challenging task for employers to hire employees. Moreover, high educational levels and skills further add to the employer’s issue;
- Liechtenstein is not a part of the EU. As a result, it is not a part of the VAT Information Exchange System (VIES). Moreover, the nation has adopted the Swiss VAT laws while having its own VAT administration. Therefore, the methodologies of charging VAT can be quite complex in nature and the respective VAT rates vary from business-to-business.
Best uses for a Liechtenstein company
- Just like Ireland, A Liechtenstein LLC is an excellent European holding company because:
- If suffers a maximum annual corporate tax of CHF1,200. If properly structured by Healy Consultants, a Liechtenstein holding company will not suffer tax on i) income from overseas operations ii) all forms of dividends and iii) international property holdings;
- Liechtenstein imposes no withholding tax on dividends, meaning that foreign owners can use these companies as tax-neutral investment vehicles;
- As part of the European Economic Area (EEA), access to the EU Parent-Subsidiary Directive means that a Liechtenstein company can receive dividends from companies in the EU, Norway and Iceland free of withholding tax, as long as the Liechtenstein company owns at least a 10% stake in the subsidiary.
- Similarly to the Luxembourg SPF, a Liechtenstein Stiftung (foundation) is a great family asset management vehicle because:
- The foundation’s yearly tax bill on its investments is a minimum tax of CHF1,200;
- The entity is not subject to capital gains tax or withholding tax. Thus, investment proceeds are free from tax in Liechtenstein irrespective of the holding period. Consequently, no tax is payable on dividends and capital gains made through the sale of investments;
- A Liechtenstein entity can receive investment income free of local tax including dividends, royalties, IP, interest;
- Legal tax exemption on foreign permanent establishment profits, rental profits from foreign real estate, dividends and capital gains;
- This entity does not need a financial license if it i) manages its own assets and ii) provides no services to third parties. To enjoy these exemptions the entity i) must have the sole purpose of managing assets ii) must not conduct commercial activities and iii) only hold investments if it exercises no actual influence on the management of the subsidiary company. Only the acquisition, holding, sale and transfer of the assets is permissible.
- Just like Ireland, A Liechtenstein LLC is an excellent European holding company because:
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Useful links for Liechtenstein
Government and public authority websites:
- Central Bank of Liechtenstein
- Chamber of Commerce
- Liechtenstein hotels
- Liechtenstein’s Financial Market Authority (FMA)
- The Principality of Liechtenstein’s National Administration (only in German)
- The Office of Economic Affairs – National Administration of Liechtenstein (only in German)
- The Office of Justice – National Administration of Liechtenstein (only in German)
- EEA Executive Support Unit – National Administration of Liechtenstein (only in German)
- The Tax Authority – National Administration of Liechtenstein (only in German)
- The Office of Immigration – National Administration of Liechtenstein (only in German)
- Liechtenstein’s Chamber of Commerce and Industry
- Liechtenstein’s Chamber of the Economy (only in German)