In Liechtenstein, the main taxes levied on businesses are corporate taxes, the capital tax, the VAT and the coupon (withholding) tax. There is no separate capital gains tax. Capital gains are treated as taxable income unless they come from real estate, in which case a property profits tax is levied.
The corporate tax regime applies to resident companies, meaning the companies that have a registered office in Liechtenstein, or which are managed and controlled by a company resident in Liechtenstein. However, holding companies or domiciliary companies have a separate taxation regime, as well as establishments, foundations and trusts.
The corporate income tax has a flat rate of 12.5%, starting with 2010, after the Liechtenstein tax system was reformed in 2010.
Profits tax in Liechtenstein
The profits tax is levied on taxable income at a basic rate between a minimum of 7.5% and a maximum of 15%. In addition, if dividend distribution exceeds 8% of taxable capital, there is a surcharge of up to 5% of taxable income in the year in which the dividend is declared.
The maximum rate of the profits tax is 20%, which is not that much for a company that makes a decent profit, without having much capital employed.
Certain provisions as following affect the taxable base for the profits tax:
- Capital gains that are not provided by real estate are treated as taxable income;
- Capital gains from real estate are taxed between a minimum of 1.2% and a maximum of 35.64%, depending on the amount of the gain, the length of time the property was held and other factors;
- Trading losses may be carried forwards, but not backwards;
- There is no group relief available for the profits tax.
Net worth tax in Liechtenstein
The net worth tax is levied on the share capital of a company, plus open and hidden reserves. In this calculation, reserves might include for example retained earnings that are brought forward, provisions for capital and income taxes and other disclosed or undisclosed reserves.
The rate of the net worth tax applied to a resident company in Liechtenstein is 0.2% of taxable net worth.
Stamp duty in Liechtenstein
The stamp duty is levied according to the Swiss legislation, which was substantially amended by the Swiss Federal Law on Stamp Duty. There is a liability to stamp duty on the issues of bonds and shares. Mergers and other corporate transformations are exempt from stamp duty. The rate of stamp duty on shares is 1%, but the first 250,000 CHF of any issues of capital are exempt from this tax.
Turnover tax in Liechtenstein
Turnover tax is payable by securities dealers and traders, which include banks, financing companies, investment funds and other legal entities and individuals whose business is focused mainly on the dealing, trading or broking of securities. It also applies to companies that hold assets, which include taxable securities valued at more than 10 million CHF. The rate of the turnover tax varies between 0.15% and 0.30%.
Property profits tax in Liechtenstein
This tax applies to individuals and legal entities that make gains from real property transactions. The rate of this tax is set annually by the Parliament, and is usually equal to the rate of the general profits tax.
VAT in Liechtenstein
The rate of the VAT in Liechtenstein is of 8%, with a reduced rate of 3.8% for hotels and lodging services and of 2.5% for food, medicines, books, magazines and newspapers. Medical and educational services, as well as most real estate transactions are exempt from VAT.
Withholding taxes in Liechtenstein
The withholding (coupon) tax applies to companies whose capital is divided into shares and is levied at the rate of 4% on any distribution of dividends or profit shares older than 2010. However, now there is no withholding tax on dividends, interests or royalties paid to a foreign or resident company.