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Liechtenstein-Switzerland Double Tax Treaty

Updated on Saturday 10th December 2016

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Liechtenstein-Switzerland-double-tax-treatySwitzerland and Liechtenstein have strong economic ties, as the Principality has adopted the Swiss franc as a national currency, but also because Liechtenstein shares a large portion of its borders with Switzerland. In order to regulate the taxation of income of individuals commuting from one state to the other for employment, Liechtenstein and Switzerland signed a double taxation treaty in 1995. A new agreement was signed in 2015 with the aim of broadening its scope. The current agreement for the avoidance of double taxation between Liechtenstein and Switzerland covers the following taxes:

  • -          the income, the real estate income, the property and the coupon taxes in Liechtenstein;
  • -          the income taxes levied at federal, cantonal and municipal level and the taxes imposed to assets held by individuals or companies in Switzerland.

Our company registration agents in Liechtenstein can help foreign citizens who want to open companies here.

What does the new Liechtenstein – Switzerland double tax treaty provide for?

The double taxation treaty signed by Liechtenstein and Switzerland applies to individuals with a place of residence in one of the two states, but also to companies which have a place of management in the other country. Branch offices, factories and other types of offices or associated enterprises are considered permanent establishments and will be taxed in the country where they are operating provided that they have been set up there for a minimum period of 12 months.

The avoidance of double taxation will occur by grating a credit or a tax exemption in the case of Switzerland, while Liechtenstein will offer tax deductions or partial exemptions on the taxes levied twice.

New tax rates in the Liechtenstein – Switzerland double tax agreement

The most significant changes brought to Liechtenstein’s double taxation agreement with Switzerland refers to the reduced tax rates applied to dividends, interests and royalties. The new tax rate for dividend payments was reduced from 35% to 15%, while interest and royalties payments will be subject to a 0% tax rate.

It should also be noted that the double taxation treaty between Liechtenstein and Switzerland was enforced at the beginning of 2016. You can obtain more information on the agreement by contacting our company formation consultants in Liechtenstein.

 

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