Liechtenstein is a Central European country. Its official name is the “Principality of Liechtenstein”. The small country situated between Austria and Switzerland is known mostly for its capital, Vaduz, which is a financial center interconnected with other great cities across the globe. Liechtenstein is a member state of the European Economic Association, but not joined the European Union. The country is still tied mostly to Switzerland, its currency is the Swiss franc while German is the official language spoken by the majority of its citizens.
The most common form of business specific to the small and medium businesses is the limited liability company (Gesellschaft mit beschränkter Haftung or GmbH) which has to be established with a minimum capital share of CHF30,000. (around EUR 26.000) and it is mandatory to be contributed with the founding.
The Limited Liability Company in Liechtenstein can be formed by two or more persons, namely companies or private or public law entities, who join together for a defined purpose. Shareholders are liable up to a pre-determined amount while the initial contribution of each shareholder must amount to at least 50 CHF and may not be reclaimed.
Furthermore, Liechtenstein limited liability companies have to pay an annual income tax. LLCs qualifying as Private Wealth Structures (PVS) are subject to taxation at the annual minimum income tax of 1,200 CHF. However, LLCs that are commercially active, are subject to a general income tax of 12.5%.
Other requirements:
- Mandatory bookkeeping
- Audited annual accounts have to be lodged
- Legal form well-known internationally
- Publicly registered stakeholders
- Tax residency – Companies registered in Liechtenstein or its place of effective management in Liechtenstein are deemed to be residents for tax purposes.
A Liechtenstein Limited Liability Company (LLC) has these benefits:
- Two Shareholders: The minimum number of shareholders is two to form an LLC which is favored by small companies seeking limited liability.
- One Director: The LLC can be managed by only one director or more if the shareholders so choose.
- Privacy: Shareholders names are not included in any public records and Bearer Shares can be issued for further privacy.
- Tax credits and incentives – There are tax exemptions for entities that have an irrevocable charitable, cultural, or ideal purpose without commercial activity, as well as for dividend income and capital gains on participation.
- Free access to markets in Europe
- Large potential of specialists and experts from Switzerland, Austria, and Germany
- Stable social, legal, and economic order
- AAA credit rating
- Excellent infrastructure
Moreover, it is good to know that Liechtenstein has signed numerous double taxation treaties with countries worldwide where numerous tax exemptions on incomes are stipulated.
The Principality of Liechtenstein is an excellent business location with a wide range of benefits for companies. Even though it is a small state, Liechtenstein is considered to be one of the most politically stable countries in the world.
