Liechtenstein

Individual - Income determination

Last reviewed - 18 June 2020

Generally, all income is subject to annual income tax.

In particular, the following income is taxable:

  • Income from agricultural/forestry activity.
  • Income from self-employed activity.
  • Income from employed activity.
  • Income from unemployment, accident, life, and health insurance.
  • Income from lottery if this income is not subject to special tax for lottery or a foreign tax.
  • Proceeds from gambling, unless a gambling tax pursuant to the Gambling Act or a foreign tax has been paid on such proceeds.
  • Compensation for the surrender, severance, or non-performance of an activity or right.
  • Support payments received by a taxpayer upon divorce or legal or actual separation for oneself, as well as support payments received by a parent for children in one’s care.
  • Contributions received by a taxpayer as a beneficiary, to the extent the privilege is not subject to wealth tax.
  • Nominal income arising from taxable wealth.

Employment income

An employee resident in Liechtenstein is principally taxed on any salary and any other monetary benefits (including reimbursements of living expense) received from the employer, regardless of where the work has been performed or where the payment is made.

Capital gains

Capital gains from disposal of shares in domestic or foreign corporations are tax-exempt. In return, capital losses cannot be deducted.

Capital gains deriving from foreign participations held as business assets are subject to new anti-abuse provisions introduced as of 13 July 2018. Capital gains deriving from investments in foreign legal entities are not tax-exempt for income tax purposes anymore if more than 50% of the total income of the foreign legal entity consists of passive income and its taxable income is subject, directly or indirectly, to low taxation. This new rule is applicable as of 2019 for participations established as of 2019 and as of 2022 for participations established before 2019.

Dividend income

Liquidation proceeds are tax-exempt. Dividend income is tax-exempt for individual investors (shareholders or beneficiaries) provided that the payment from ≥ 25% participations held as business assets is not tax deductible in the source country. The correspondence principle, however, does not apply for dividends received from participations& that are held as private assets.

Dividend income deriving from foreign participations held as business assets are subject to new anti-abuse provisions introduced as of 13 July 2018. Dividend income deriving from investments in foreign legal entities is not tax-exempt for income tax purposes anymore if more than 50% of the total income of the foreign legal entity consists of passive income and its taxable income is subject, directly or indirectly, to low taxation. This new rule is applicable as of 2019 for participations established as of 2019 and as of 2022 for participations established before 2019.