A subsidiary is an operating company used by a parent company in other countries, for various commercial or non – commercial activities. In Liechtenstein, a subsidiary is a separate legal business. The degree of control that the parent company exercises over the subsidiary depends on the management style of the parent company’s executives and on the share ownership structure.
Advantages of a subsidiary in Liechtenstein
The parent – subsidiary structure helps isolate risks, as the two companies ate two separate legal entities. The losses of a subsidiary do not automatically transfer to the parent company. The parent company, however, can exercise control over a subsidiary if it owns a large part of its stock, but not necessarily the majority of the shares.
This structure also allows for a greater diversification and increased efficiency, partly because the senior management of the parent company does not have to be involved in the operational details of the subsidiary.
Lastly, there are certain important tax advantages of having a subsidiary in Liechtenstein, as the country offer many tax incentives for foreign investors, as well as attractive tax deductions for companies that pay a corporate tax in Liechtenstein.
How to open a subsidiary in Liechtenstein
There are various legal entities available in Liechtenstein for opening a subsidiary, but the most common one is the Private Limited Company (AG). This type of company is allowed to conduct commercial activities and engage in diverse commercial activities, including the international trade of goods and services, holding investments and real estate administration.
In order to form an AG, it is required that at least one of the company’s directors is a resident of Liechtenstein and is fluent in German. The company must have a registered office in Liechtenstein and an appointed auditor.
Another option for a subsidiary company in Liechtenstein is the Establishment (Anstalt). Although this company requires a board of directors, it is not required to have shareholders or other members involved. This company may conduct commercial or non – commercial activities in Liechtenstein.
Bookkeeping is mandatory for Establishments and in the case of companies who conduct commercial activities annual audits are required.
Setting up a subsidiary in Liechtenstein is a relatively quick and easy process. After a name is chosen for the new subsidiary and submitted with the Public Registry, the company founder or founders must draw up the articles of association, which will be notarized by a public notary in Liechtenstein.
A bank account with a Liechtenstein bank is required to deposit the minimum required share capital for the new subsidiary. The bank will provide a Certificate of Deposit to serve as proof the bank deposit made.
After all the documents are prepared, including the company deed, a declaration containing the names and personal details of the company director and shareholders and a declaration to appoint the company’s auditors, everything is submitted with the Public Registry in Liechtenstein.
The process is completed after the company is also entered in the Commercial Registry. If the subsidiary will conduct commercial activities, it is also required to submit an application with the Office of Economic Affairs.