Corporate - Tax credits and incentivesLast reviewed - 22 February 2023
The following tax incentives are currently applicable:
- Profit tax exemption for corporations that have an irrevocable charitable, cultural, or ideal purpose without commercial activity.
- Profit tax exemption of dividend income and capital gains on shares/participations (especially interesting for holding companies).
- NID on equity (see the Deductions section).
- Private asset structure (PAS).
Private asset structure (Privatvermögensstrukturen or PAS)
Liechtenstein offers tax privileges for PASs. A PAS must not conduct any economic activity. The purpose of a PAS is limited to acquiring, holding, administrating, and selling financial instruments according to the Liechtenstein assets management law as well as cash and bank accounts in the interest of the investor. Participations may only be held if it can be proved that the shareholders or beneficiaries have no influence on the administration of this company.
The articles of the PAS must contain a clause that the regulations for PASs are applicable. Exemptions of this rule are applicable for legal entities that existed before the introduction of the tax law as of 1 January 2011.
The investors of a PAS must be individuals who administrate their own assets or structures acting in the interest of individuals.
The company or the audit company needs to confirm, upon formation or after major changes, that the conditions for the PAS structure are fulfilled. This is supervised by the tax authorities or a neutral certified accountant.
A PAS only pays the minimum tax of CHF 1,800 annually.
This tax scheme was qualified as in conformity with the provisions on state aid set out in Article 61 of the Agreement on the European Economic Area by the ESA.
Avoidance of double taxation
Foreign taxes shall be allowable against domestic taxes (credit method) under circumstances where (i) the income is derived or wealth is owned in a country that has concluded an agreement for the avoidance of double taxation with Liechtenstein and such agreement provides for a tax credit or (ii) reciprocity is granted. Income or wealth shall be exempted from taxation in Liechtenstein (exemption method) if the agreement for the avoidance of double taxation provides tax exemption or if reciprocity is granted.