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Liechtenstein
Company formation in brief
The Principality of Liechtenstein corporate law provides for the establishing of entities of various organizational and legal forms including those which may be of interest to a potential foreign investor, such as:
• Gesellschaft mit beschränkter Haftung (GmbH) - private limited liability company
• Aktiengesellschaft (A.G.) - joint-stock company
• Anstalt - establishment
• Stiftung - private foundation
• Trust Enterprise
All foreign-owned entities, including trust enterprises (but not conventional trusts), may be exempted from certain types of taxes in Liechtenstein and operate either as holding or as so-called domiciled (or “offshore” as they are defined locally) trade companies generating income outside Liechtenstein.
Holding company is an entity aimed exclusively or primarily at management of property and participation or continuous management of participation in other companies.
Domiciled company is a company only registered in Liechtenstein and having no commercial operations in the Principality.
Private limited liability company is characterised as follows:
• the entire capital (at least CHF 30’000) shall be subscribed by shareholders, and at least CHF 50 shall be paid up by each shareholder upon registration. The remaining part of the capital is paid up only if this is required by statutory documents;
• shareholders’ liability is limited by their shares in the company’s charter capital;
• the minimum number of shareholders is 1, their quantity may not exceed the number provided for by the Memorandum of Association. Both natural persons and legal entities, residents and non-residents of Liechtenstein, may be shareholders;
• only registered shares may be issued;
• shareholders are free to transfer their shares to third parties, if the company’s Memorandum of Association provides for taking a relevant resolution by the general shareholders’ meeting;
• the company may be managed by one director (a physical or legal person);
• foreigners may become directors but at least one director shall have permanent residence in Liechtenstein and meet certain professional requirements.
• the company must appoint an auditor for annual reporting.
Joint-stock company can be established both as open and closed type company and is characterised as follows:
• the entire capital (at least CHF 50’000) shall be subscribed by shareholders, and at least 20% of it shall be paid up upon registration. The remaining part of the capital must be paid up only if this is required by statutory documents but bearer shares shall be paid up in full;
• the minimum number of shareholders is 2, and their maximum number is not limited. Both physical persons and legal entities, residents and non-residents of Liechtenstein, may be shareholders. Shareholders’ liability is limited by their shares in the company’s charter capital;
• both registered and bearer shares may be issued;
• shareholders are free to transfer their shares to third parties;
• the company is managed by the Board of Directors composed of both physical persons and legal entities. Foreigners may become directors but at least one member of the Board of directors shall have permanent residence in Liechtenstein and meet certain professional requirements;
• company shall appoint a local attorney for communication with the registrar of companies if more than half of the directors are not residents of Liechtenstein, as well as an auditor for annual reporting;
• the company’s shares are not required to be publicly offered or quoted on the stock exchange.
The establishment may be used as holding entity for holding patents, copyright or immovable property and is characterised as follows:
• anstalt may have one founder - a physical person or a legal entity (no members or shareholders);
• both physical persons and legal entities may become beneficiaries;
• founders are not required to be beneficiaries;
• the capital shall be at least CHF 30’000 if it does not issue shares, and no less than CHF 50’000 if it issues shares. At least 50% capital shall be paid up by the founders upon registration;
• founders may transfer their rights to third parties only if the capital is not divided into shares;
• anstalt shall be managed by the board of directors composed of both physical persons and legal entities, both residents and non-residents of Liechtenstein. At least one member of the board of directors shall have permanent residence in Liechtenstein and meet certain professional requirements;
• anstalt shall file its audited accounts each year provided that it has commercial operations.
Private fundation is a legal entity usually established for non-commercial purposes. Company has the right to generate income within statutory purposes usually limited by areas of investments and management of property.
Stiftung is characterised as follows:
• the minimum capital is CHF 30’000;
• the founders’ rights may be transferred to third parties;
• the company is managed by the Board; at least one of the Board members must reside permanently in Liechtenstein and meet certain professional requirements;
• The Board approves internal regulatory documents which determine profit distribution and other provisions regulating business and administrative aspects of the company's operations.
Trust Enterprise may be established in Liechtenstein for both commercial and non-commercial purposes and may be established as a corporate or unincorporated entity. Liechtenstein law provides for the establishing of trust without time limit.
Trust Enterprise's minimum capital is CHF 30’000. Trust Enterprise shall be managed by trustees; at least one of the trustees must have residence in Liechtenstein and meet certain professional requirements. If trust enterprise has business operations, the law requires them to be audited.
No licenses are required for doing business in Liechtenstein, except for the companies operating in the financial sector.
Any profit gained from local sources in Liechtenstein is subject to taxation.
Holding and domiciled companies, as well as foundations (Anstalt), closed fund companies and trusts that generate income only outside Liechtenstein are not subject to taxation in Liechtenstein but pay a fixed annual duty of 0.1% of the capital but no less than CHF 1’000 per year.
A one-time stamp duty equal 0.5% of the company’s or foundation’s (Anstalt) charter capital of up to CHF 10’000’000 is charged upon its registration in Liechtenstein, and 0.3% - upon registration of the company with a charter capital exceeding CHF 10’000’000.
A one-time stamp duty equal to 0.075% of the closed fund company’s or trust’s charter capital not exceeding CHF 10’000’000 is charged upon its registration in Liechtenstein, and a one-time stamp duty equal to 0.05% – of the charter capital exceeding CHF 10’000’000.
Liechtenstein follows all modern international anti-money-laundering conventions and, therefore, exchanges information with virtually every country in the world.
Following the revision of § 165 Criminal Act, the usage of active (services, production, trade etc.) offshore and on-shore companies without physical substance will be seen by all local banks as potential tax fraud.
Therefore, such companies effecting bank transfers must be documenting:
- their physical substance at the place of effective management;
- existence of an adequate number of qualified employees;
- availability of adequate office space / storage facilities with appropriate infrastructure;
- existence of reasonable expenses according to the company’s activity;
(the above can be accomplished by providing employment agreements, lease agreements, utility bills and/or financial statements showing wages/insurance/rental expenses)
- their tax registration or another form of tax conformity in the jurisdiction where the place of effective management is located;
- in case their tax registration is unavailable: auditor’s opinion;
- the economic sense of their transactions.
It must be taken into consideration that the provision of those documents does not guarantee the fulfilment of the economic substance requirements.
Another innovation is that companies classified as active under CRS (ANFEs) without sufficient evidence of their status will be seen as an indication for money laundering.
In case of doubts as to the appropriate classification, a temporary classification as passive non-financial entity (PNFE) is permissible for the duration of obtaining the documents.
The PNFE classification for commercially active companies points to inadequate documentation or incorrect classification.
The evidence of active ANFE is:
- Financial statements
- Trade certificate/trading license
- Extract from company register/commercial register, or
- Invoices and trade contracts
Liechtenstein has concluded double taxation treaties (DTTs) with Andorra, Austria, Czech Republic, Georgia, Germany, Guernsey, Hong Kong, Hungary, Iceland, Jersey, Lithuania, Luxembourg, Malta, Monaco, Netherlands, San Marino, Singapore, Switzerland, the United Arab Emirates, the United Kingdom, and Uruguay.
Liechtenstein has concluded tax information exchange agreements (TIEAs) with Andorra, Antigua and Barbuda, Australia, Belgium, Canada, China, Denmark, Faeroe Islands, Finland, France, Germany, Greenland, Iceland, India, Ireland, Italy, Japan, Mexico, Monaco, Netherlands, Norway, St. Kitts and Nevis, St. Vincent and the Grenadines, South Africa, Sweden, the United Kingdom, and the United States.
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