Tax Haven Liechtenstein

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Tax haven Liechtenstein is one of the top jurisdictions which continue to defend the concept of privacy rights despite the increasing pressures that have been applied by the OECD and countries such as France and Germany, which lately have been on the move to crack down on tax havens. As a tax haven, Liechtenstein is committed to protecting the privacy of its clients and serving their best interests despite the various tax information exchange agreements signed before and after the G20 summit of April 2009.

Liechtenstein’s smallness in size does not hinder the country from being increasingly linked with international business and trade.

Country Overview

Tax haven Liechtenstein is formerly known as the Principality of Liechtenstein. Tax haven Liechtenstein is mountainous and is considered the world’s smallest Germany-speaking nation, and following the Vatican City is the 4th smallest within Europe. The country’s ethnic makeup consists of Turks, Germans, Swiss, Austrians and Italians. Religiously, tax haven Liechtenstein has a religious community predominated by Roman Catholics who make up roughly 76% of the entire population, while 7% share protestant beliefs, including Islam 4.8%. According to 2007 estimates, tax haven Liechtenstein has a population of 35, 322 and uses the Liechtenstein frank as its currency. The GDP is according to 2007 figures is $4,993 billion. Tax haven Liechtenstein is said to have limited natural resources; however, the country is very industrialized and is a very advanced international financial centre. The corporate taxes in Liechtenstein as a tax haven are relatively low, making it an investment hub for banks and other businesses.

Liechtenstein Fiscal Incentives and Advantages

As a premier tax haven, Liechtenstein has the following features which make it a leading tax haven:

  • Strong privacy laws
  • Economic stability
  • Superior IT infrastructure
  • Favorable tax incentives
  • Friendly business climates
  • Progressive legislation
  • Highly skilled labour force
  • Strong export industry

Liechtenstein Offshore Financial Services

Tax haven Liechtenstein has not only made its name in the area of banking secrecy, but in the level of high quality professional services that are provided. In 2005, reports showed that there was a total of 14 pension programs; 16 banks; 239 foreign investment undertakings; 1, 314 financial service providers including trustees, lawyers, real estate brokers, lawyers, exchange offices, due diligence agencies, auditors and patent attorneys; and 31 insurance companies.

Asset management in particular has contributes significantly to tax haven Liechtenstein’s economy. The Asset Management Act assumes the role of regulating the conditions under which commercial offerings are carried out and asset management services are procured.

Tax haven Liechtenstein provides a comprehensive list of offshore financial services which include the following activities:

  • Insurance
  • Banking
  • Finance companies
  • Trust services
  • Asset management
  • Investment funds

Liechtenstein Legislative Framework

The financial centre plays an important role in the Prosperity of Liechtenstein’s economy and it is thankful to the many successful and influential clients from around the world who have placed their trust in Liechtenstein because of the country’s political stability, liberal laws, high privacy standards, favorable taxation and quality professional services. Optimizing the financial sector has been synonymous with passing the necessary laws that would keep Liechtenstein as a tax haven abreast with international requirements and guidelines. Some of the Acts that have directly impacted and influenced the growth of Liechtenstein as a tax haven include the:

  • Insurance Supervision Act 1996
  • Investment Undertakings Act
  • Ordinance on the Levying of Supervision Duties and fees according to the Financial market Supervision Act
  • Due Diligence Act
  • Asset Management Act

Liechtenstein Financial Market Authority (FMA)

The Financial Market Authority in tax haven Liechtenstein was established in January 2005. The FMA is a hybrid entity which encompasses the Due diligence Unit, Financial Services Authority and the Insurance Division of the Office of Economic Affairs. Tax haven Liechtenstein’s FMA is an independent agency with its own legal personality. The FMA seeks to protect Liechtenstein’s clients both domestically and globally, implement regulatory measures whilst ensuring that they are upheld by the various actors within the financial sector, shield Liechtenstein as a tax haven and international financial market and fight against and eliminate illicit financial activities such as fraud and money laundering.

The core functions of the Financial Market Authority Liechtenstein are to:

  • Supervise and regulate the financial market
  • Implement ordinances and laws established by the Financial Services Authority, the Government, Due Diligence Unit, and the Insurance Division of the Office of Economic Affairs (except Health Insurance Act and the Compulsory Accident Insurance Act)
  • Grant, withdraw and revoke licenses of financial services providers

Recent Developments

During the early months of 2009, tax haven Liechtenstein found itself in an uncomfortable position with the OECD, Organisation for Economic Cooperation and Development. Like several other tax havens, Liechtenstein was pressured into committing itself to provide tax information of foreign nationals who held offshore bank accounts in the country. Despite the threat to the country’s long standing policies on banking and corporate privacy, tax haven Liechtenstein continues to pledge its commitment to protect and serve the best interests of the families and corporations that have entrusted their financial matters to the Liechtenstein as a tax haven.

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