Liechtenstein Company Incorporation
In Liechtenstein the main corporate legislative document is the Act on Persons and Companies (1926). This is the only country in Europe with a separate law regulating registered trusts. The capacities of corporate entities are laid out in their statutes. German is the official language for legislative and corporate papers; translations in other languages are also available.
Types of companies in Liechtenstein
In Liechtenstein the list of entities dealing with international trade and investments includes:
– “Aktiengesellschaft” /AG/: a share-limited company;
– “Anstalt”: a commercial/non-commercial establishment without shares;
– “Stiftung”: a foundation;
– “Gesellschaft mit beshrankter Haftung” /GmbH/: a private limited liability company, no shares;
– “Treuunternehmen”: a registered trust
– “Treuhandschaft”: a trust
Lichtenstein is an attractive destination for setting up a business due to its flexible legislation. It allows the establishment of any legal entity recognised by any jurisdiction worldwide. The most commonly used types of entities dealing with commerce are: i) Anstalt = Establishment; ii) Stiftung = Foundation, and iii) Aktiengesellschaft = Share-Limited Company.
With respect to taxes, the most convenient entity is the Establishment. It is often set up by foreign investors as a holding for subsidiaries/branches overseas. As an entity, the Establishment does not have any shareholders, participants or members. It represents a hybrid between a Share-Limited Company and a Foundation. The main reason for its popularity is that almost all types of business operations are conducted for free, including passive non-trading operations (e.g. holding of investments).
The purposes of a Foundation are often family-oriented, non-commercial or non-profit since it is not convenient for performance of commercial activities. The entity is mainly used for holding assets, property and shares in different companies. In Liechtenstein the Foundation is exempt from income, capital, transfer and inheritance tax.
The restrictions below apply to business and trade activities in the country:
Corporate entities/trusts cannot operate in the field of insurance, reinsurance, assurance, banking, management of funds, schemes for collective investment and similar fields generally associated with the industry of finance and banking. Such activities require additional licensing.
Procedures for establishing a company in Liechtenstein
The procedure for establishment of entities in Liechtenstein is subject to the Civil Law. All entities have to assign a representative in the country. The information presented below must be submitted to the Public Registry (Offentlichkeitsregister):
– The document presenting the statutes and rules of procedure duly signed by the applicant/agent;
– The requested company name;
– Amount of share capital, distribution and share type (where applicable);
– A declaration for the deposition of the minimum capital in a bank in Liechtenstein / Switzerland;
– Personal details of the directors (name, address, nationality) and a document confirming their agreement to assume the director’s position;
– Personal details of the shareholders (name, address, nationality);
– A statement for the appointment of a local representative with Liechtenstein residency;
Already established companies are not usually available because of the costs for incorporation and the requirements for the provision of minimum share capital.
Share-Limited Companies, Private Limited Liability Company and Establishments must have at least one director, either a natural or a legal person. In Liechtenstein, the Foundation (Stiftung) has a Council instead of a Directors Board. Its directors (council members) can be either natural or legal persons of any nationality. However at least one council member (director), a natural person, must have Liechtenstein residency and the necessary credentials to represent the company.
The Principality of Liechtenstein does not legally require the appointment of a secretary. Any entity registered in the country must have at least one shareholder/beneficiary/equity participant. The minimum amount of deposited shared capital for authorization for the separate entities is:
– for a Share-Limited Company: 50 000 CHF
– for Establishment: 30 000 CHF
– for Foundation: 30 000 CHF
– for Trust Enterprise: 30 000 CHF
Permitted types of shares
An Establishment can issue preference, registered and bearer shares, no-par stocks or shares with special voting rights.
A GmbH, Establishment, Foundation or Trust cannot issue shares. The rights of the shareholders are laid out in the statutes or rules of procedure of the company. A GmbH must have a minimum of two shareholders.
Yearly taxes and fees
The taxes and licensing fees are determined by the structure of the entity. A Share-Limited Company is charged a coupon tax (4 per cent) on dividends and a yearly capital tax (0.1 per cent) on the value of its net assets. There is an annual tax minimum of 1 000 CHF.
An Establishment, regardless of whether it is commercial or not (with no division of the capital), is exempt from coupon tax and pays only a yearly capital tax (0.1 per cent) on the value of its net assets. There is an annual tax minimum of 1 000 CHF.
A registered/deposited Foundation is exempt from coupon tax and pays only a yearly capital tax (0.1 per cent) on the value of its net assets. There is an annual tax minimum of 1 000 CHF.
A Trust pays either a yearly tax of at least 1 000 CHF or 0.1 per cent on the value of its net asset.
The only treaty for avoidance of double taxation in Liechtenstein is with Austria.
The financial reports must fulfil the following requirements:
Share-Limited Companies and GmbH are obliged to perform an audit and present a financial report to the national tax authorities for review.
Commercial Establishments perform an audit and submit a financial report to the national tax authorities.
Non-commercial Establishments do not have to present accounts to the tax authorities; it is sufficient to submit a bank statement for the availability of an asset record.
Foundations do not have to present accounts to the tax authorities; it is sufficient to submit a bank statement for the availability of an asset record.
Lichtenstein Infrastructure and Economy
The economies of Liechtenstein and Switzerland are closely linked to one another. There are no customs inspection offices at the border between the countries.
Banking and Finance is a major branch in Liechtenstein’s economy. This industry is well known for its strict requirements for confidentiality and the serious penalties imposed for breaches thereof. Liechtenstein is a popular location for international businesses due to its low taxes, relatively lenient regulations for company operation and very high level of banking confidentiality.
The Swiss Franc is the official currency. There is no Forex Control, by virtue of a treaty signed with Switzerland.