Introduction
Patrick: Welcome to our first Liechtenstein Financial Services Podcast. In the Liechtenstein Financial Services Podcast, we will explore the legal, regulatory, and tax perspectives of banks, funds, asset managers, and other participants in the Liechtenstein financial centre. A production of PwC Liechtenstein.
Today, we are discussing the attractiveness of Liechtenstein as a financial tax centre.
I am Patrick Wiech, your host, with 11 years of experience at PwC, specialising in auditing and consulting for banks and other financial services institutions.
With this podcast, we aim to provide a concise overview of opportunities and challenges in selected areas. In today’s first episode, we focus on tax topics, as there have been significant developments in this area recently.
Joining us today is Martina Walt, an esteemed international tax expert and head of our PwC office in Ruggell.
Attractiveness of Liechtenstein
Patrick: Welcome, Martina! Can you tell us a bit about yourself and your connection to Liechtenstein?
Martina: Thank you for having me on the podcast. I am a partner at PwC in the international tax division and have been advising international corporations, families, and individuals on tax matters for over 20 years. I have two connections to Liechtenstein. Firstly, I lead the PwC Liechtenstein tax team and am responsible for our office in Ruggell. Secondly, I grew up in the St. Gallen Rhine Valley, near Liechtenstein, and live in the region.
Business and Investment Attractiveness
Patrick: What are the main reasons why Liechtenstein is an attractive location for businesses and investors?
Martina: Liechtenstein is unique in many respects. It is a constitutional hereditary monarchy based on democratic parliamentary principles. It is also an EEA member, but not an EU member, and is closely linked to Switzerland through a customs union. This provides a highly stable environment from both a legal and regulatory perspective. This trust is reflected in the repeatedly confirmed AAA rating from Standard & Poor’s, and the Moneyval assessment proves that compliance, trust, and quality are the basis for success.
Despite being one of the world’s ten smallest countries, Liechtenstein boasts world-leading industrial companies and a strong financial and related services sector. The labour market benefits from its proximity to Switzerland, Austria, and Germany, providing a highly skilled workforce familiar with the financial market and wealth management sectors. The financial market is highly diversified and internationally connected through the EU and Swiss passports for funds and other vehicles.
The legal framework for companies, trusts, and foundations is modern and flexible, offering numerous legal forms, including establishments. This provides tailored asset protection and succession solutions under local and international law.
An attractive internationally compatible tax system rounds off the advantages of the location.
Tax Environment and Recent StG Changes
Patrick: Can you highlight some of the recent changes to the Liechtenstein Tax Act (StG) affecting businesses and individuals? What impact do these changes have on the tax landscape?
Martina: The last major tax reform was in 2011, when the basis for a European-compliant tax law was implemented. The changes that came into force on 1 January 2025 are mainly clarifications in the area of dedication tax or real estate capital gains tax relevant for individuals. For businesses, there are adjustments to transfer pricing corrections, an expansion of the definition of permanent establishment for dependent agents, and clarifications on loss offsetting. Additionally, the basis for public country-by-country reporting was established, and there were changes in tax transparency, i.e., automatic information exchange, FATCA, and other international standards. Liechtenstein is also continuously expanding its network of double taxation agreements, with Croatia, Belgium, Ireland, and Italy in the pipeline.
Tax Environment Development
Patrick: How has the tax environment in Liechtenstein developed in recent years, particularly in terms of regulation and adaptation to international tax standards?
Martina: Transparency and international regulatory compliance are clear priorities. Since 2009, Liechtenstein’s financial and tax sector has pursued a strategy of full compatibility with transparency and tax cooperation.
Liechtenstein was one of the first countries to introduce international information exchange and FATCA, and since then, the transparency framework has been continuously expanded to meet all international standards. Liechtenstein has implemented aspects of the OECD Base Erosion and Profit Shifting (BEPS) agreement and introduced the OECD global minimum tax, also known as Pillar 2, on 1 January 2024. Therefore, resident ultimate parent entities and investment vehicles, as well as local country companies of large groups, must take into account the local and international top-up tax of 15%. The existing country-by-country reporting of tax data will need to be made public in Liechtenstein once ratified by the EEA Council.
Global Minimum Tax OECD Pillar 2
Patrick: Can you explain the concept of the OECD Pillar 2 global minimum tax in Liechtenstein and how it differs from other tax models?
Martina: The OECD global minimum tax aims to set an international minimum standard and ensures that tax competition for large corporate groups is limited to a minimum tax of 15%. It is likely the most complex set of rules ever introduced in global tax law. A minimum tax is levied through the local and international top-up tax, also referred to as QDMTT and IIR. If both mechanisms do not apply, the concept allows for the top-up tax to be levied by other group companies through sister or parent companies, the so-called UTPR. This latter aspect raises certain treaty and constitutional validity questions and leads to fundamental discussions. For example, shortly after taking office, US President Trump announced that the US would no longer participate in the minimum tax and would take measures such as tariffs against countries that implement a UTPR. This UTPR element of the minimum tax has not been implemented in Liechtenstein and is therefore not applicable.
Future Trends and Changes
Patrick: What future trends or changes do you expect in Liechtenstein tax law that companies and taxpayers should be aware of?
Martina: Tax transparency and exchange of information will remain highly relevant topics. Liechtenstein will continue to pursue international compatibility, but will also systematically expand protection through double tax treaties. How aspects such as global wealth taxes for private individuals might become relevant will first need to be determined at the international level. However, Liechtenstein will certainly strive to remain as attractive as possible within the framework of international rules.
Patrick: In summary, Liechtenstein has clearly positioned itself as a premier financial hub by aligning its tax and regulatory frameworks with international standards. The country’s commitment to transparency, compliance with international regulations, and the strategic expansion of double tax treaties enhance its attractiveness. For private wealth investment, Liechtenstein offers a robust banking environment and attractive fund and legal vehicle structures. Liechtenstein, a hidden gem on the global stage.
Building on this foundation, future episodes will explore new topics, including legal, regulatory and other issues. Stay tuned for our upcoming episodes.
In the meantime, contact us for a personal exchange on how Liechtenstein can fit into your agenda.