Liechtenstein is a one of the countries with not a vast network of double tax treaties
signed all over the years mostly because of its advantageous fiscal system which grants no withholding taxes on interests, dividends and royalties paid to non-residents and a reduced corporate tax.
The first treaty ever signed was with Austria in 1969, followed in 1995 by the treaty signed with Switzerland. Two more treaties were signed in 2009, with Luxembourg and San Marino. The year 2010 has brought two treaties with Uruguay and Hong Kong. The last double tax treaty (DDT) was signed with Malta in 2013. Also, in 2013, Liechtenstein has signed various updates of the treaties, such as the one with Switzerland (DTA Treaty Update), Austria (to add Organization for Economic Cooperation and Development model tax provisions on tax information exchange to their existing DTA), with UK and Germany (a new DTA effective in 2013).
The provisions of double tax treaties in Liechtenstein
The provisions included in the double tax treaties are referring to:
- the personal income tax,
- the corporate income tax,
- the wealth tax,
- the corporation taxes,
- the coupon tax,
- the real estate capital gains tax.
The usual corporate tax in Liechtenstein is 12.5% (minimum CHF 1,200, except for small businesses), but due to these treaties it is exempt or credit in the country of origin.
The withholding taxes paid by entities of the local Liechtenstein companies are exempt or minimized by the provisions of the DDTs. The interests, royalties and dividends paid to the foreign entities by the Liechtenstein companies are exempt by law.
For beneficiating from these provisions, the applicant must deliver to the Liechtenstein tax authorities a tax certificate from the country of residence for proving that the taxes are already paid in that country.
In order to prevent the tax frauds, the treaties contains provisions on the tax information exchange, if they are elaborated under the OECD model. According to it, the Liechtenstein tax authorities may require information related to tax payers from the partner countries and reverse.
Liechtenstein has also signed tax information exchange agreements with the same purposes of avoiding tax frauds with: USA (2008), United Kingdom (2009), Germany (2009), Andorra (2009), Monaco (2009), France (2009), St. Vincent and the Grenadines (2009), Ireland (2009), Belgium(2009), Netherlands (2009), Antigua and Barbuda(2009) and St. Kitts and Nevis (2009).
In 2013, tax information exchange protocols were updated with India, Canada and Japan.
If you are interested in more information about how you can avoid double taxation
for your company in Liechtenstein, you may contact
our local law firm