The principal Corporate Legislation is the Persons and Companies Act of 1926. Liechtenstein is the only country on the Continent to have a Law on Registered Trusts. The powers of Liechtenstein corporate bodies are contained in the Companies’ statutes. The language used for legislation and corporate documents is German, but foreign language translations can be obtained.
The types of Company used for International trade and investment are:
- Aktiengesellschaft or AG (a company limited by shares).
- Anstalt (an Establishment, commercial or non-commercial, without shares).
- Stiftung (a Foundation).
- Gesellschaft mit beshrankter Haftung – GmbH (a Private Limited Company without shares).
- Treuunternehmen (a Registered Trust).
- Treuhandschaft (a Trust).
One of the main attractions of Liechtenstein is its extremely flexible company law, which allows for the creation of any type of legal organisation, which is recognised under the law of any jurisdiction in the world. The three main types of commercial entity in use are: (1) the Establishment, or Anstalt; (2) the Foundation, or Stiftung; (3) the Company limited by shares, or AG.
The most important entity for tax purposes is the Anstalt, which is commonly used by foreign companies as a holding company for overseas subsidiaries. The Anstalt is an entity that has no members, participants or shareholders, and is a hybrid of a company limited by shares and a foundation. It is popular because with minor exceptions it is free to conduct all kinds of business, including non-trading activities such as holding of passive investments.
A Stiftung (Foundation) is typically formed purely for family, non-profit or non-commercial reasons, since a foundation is not suitable for the pursuit of commercial business. This type of foundation is commonly used to hold assets, fixed property or shares in other companies. A Liechtenstein foundation is not subject to any form of income tax, capital tax, transfer tax or inheritance tax in Liechtenstein.
Trading and business activities are subject to the following restrictions:
A Liechtenstein corporate body or trust cannot undertake the business of banking, insurance, assurance, reinsurance, fund management, collective investment schemes or any other activity that would suggest an association with the Banking or Finance industries, unless a special licence is obtained.
Incorporation procedure for Liechtenstein entities follows Civil Law practice. Entities must appoint a local representative. The procedure requires the submission of the following information to the Offentlichkeitsregister (Public Registry):
- The Deed constituting the statutes and by-laws signed by the subscriber or agent.
- The proposed name of the company.
- Share capital, division of capital and type of shares (where appropriate).
- A declaration that the minimum capital has been paid into a Bank in either Liechtenstein or Switzerland.
- Names, addresses and nationalities of directors and confirmation that they consent to act as directors.
- Names, addresses and nationalities of shareholders.
- Confirmation that a Liechtenstein resident representative has been appointed.
Owing to the costs associated with incorporation and paid up share capital requirements, off-the-shelf companies are not normally available.
Company names are subject to the following restrictions:
- The name may be in any language that uses the Latin alphabet, but the Public Registry may require a German translation.
- A name that is identical or similar to an existing name is not acceptable.
- A major name that is known to exist elsewhere is not acceptable.
- A name that may imply government patronage cannot be used.
- A name that in the opinion of the Registrar may be considered undesirable is not permitted.
- The following names or their derivatives require consent or a licence: Bank, Building Society, Savings, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Liechtenstein, State, Country, Municipality, Principality, Red Cross.
- The name must end with one of the following suffixes denoting limited liability: Aktiengesellschaft or AG; Gesellschaft mit beschrankter Haftung or GmbH; Anstalt or Est.
The minimum number of directors for the Aktiengesellschaft (AG), GmbH and Anstalt is one. The directors may be natural persons or bodies corporate. A Liechtenstein Stiftung does not have a board of directors, but appoints a Foundation Council. The directors (members of council) may be natural persons or bodies corporate. They can be of any nationality, but at least one director (member of council) must be a natural person, a resident of Liechtenstein and qualified to act on behalf of the company.
The concept of a company secretary is not recognised in the Principality of Liechtenstein.
The minimum number of shareholders/equity participants/beneficiaries of any Liechtenstein entity is one.
The minimum authorised, issued and paid up share capital are as follows:
- An Aktiengesellschaft is CHF 50,000.
- Anstalt: CHF 30,000.
- Stiftung: CHF 30,000.
- Trust Enterprise: CHF 30,000.
The following classes of shares are permitted:
- An Aktiengesellschaft (AG) may issue registered, bearer or preference shares, also shares without par value or with special voting rights.
- A GmbH, Anstatlt, Stiftung or trust are not allowed to issue shares and the shareholders’ rights are assigned by Deed or Bylaws. The minimum number of shareholders in GmbH is two.
Annual Taxation and Fees
The taxation and licence fees depend on the type of entity:
- An Aktiengesellschaft (AG) pays a 4% coupon tax on dividends and an annual capital tax of 0.1% on the net asset value of the company. The annual minimum is CHF 1,000.
- A commercial or non-commercial Anstalt, provided the capital has not been divided, does not pay a coupon tax but pays an annual capital tax of 0.1% on the net asset value of the company. The annual minimum is CHF 1,000.
- A Stiftung, whether registered or deposited, does not pay a coupon tax, but must pay an annual capital tax of 0.1% on the net asset value of the company. The annual minimum is CHF 1,000.
- Trusts pay a minimum annual tax of CHF 1,000 or 0.1% on the net asset value.
Liechtenstein has only one double tax agreement, with Austria.
The following requirements apply to the financial statements:
- An Aktiengesellschaft (AG) or GmbH is required to submit an audited financial statement to the Liechtenstein tax administrator for assessment.
- A commercial Anstalt is required to submit an audited financial statement to the Liechtenstein tax administrator.
- A non-commercial Anstalt need not submit accounts to the Liechtenstein tax administrator; a statement by the bank that a record of its assets is available is sufficient.
- A Stiftung need not submit accounts to the Liechtenstein tax administrator; a statement by the bank that a record of its assets is available is sufficient.
Economy and Infrastructure
The economy of Liechtenstein is very closely related to the Swiss. There is no customs control on the border between Liechtenstein and Switzerland.
Banking and financial services are one of Liechtenstein’s main industries, and within this industry there are high levels of secrecy, with heavy sanctions imposed for any breaches of confidentiality. The combination of low taxation, fairly liberal regulations for the running of companies and very well protected banking confidentiality makes Liechtenstein very attractive as an international business centre.
The official currency of Liechtenstein is the Swiss Franc. Under a treaty with Switzerland, there is no foreign Exchange Control.