Liechtenstein

The Liechtenstein Parliament passed the law on the automatic exchange of information (AIA law) with various amendments to the Liechtenstein Tax Act on 6 November 2015. The AIA law corresponds mainly with the Organisation for Economic Co-operation and Development (OECD) common reporting standard (CRS) and shall introduce a uniform standard for exchanging tax information with tax authorities of other countries. The AIA law entered into force on 1 January 2016.

Furthermore, the Liechtenstein Parliament passed the amending Protocol to the agreement between the European Community (EC) and Liechtenstein on taxation of savings income in the form of interest payments (European Union [EU] interest savings agreement) on 6 November 2015. The amending Protocol changes the EU interest savings agreement into an AIA agreement. The amending protocol entered into force on 1 January 2016.

With the tax law amendments that entered into force on 1 January 2017, the correspondence principle for dividends to avoid double non-taxation was introduced. Individual investors (shareholders or beneficiaries) shall only benefit from the participation exemption on dividend income if 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 and capital gains deriving from foreign participations held as business assets are subject to anti-abuse provisions. Dividend income and 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. The grandfathering for participations established before 2019 ended on 31 December 2021.