Liechtenstein is one of the most favorable countries for foreign investments from a taxation point of view. This is one of the main reasons tax minimization can be employed here in an effective manner. Most foreign enterprisers and citizens working here would even say that tax minimization is not even necessary, because of the low corporate tax and the salary-related deductions Liechtenstein offers.
Tax minimization can also be referred to as tax planning which implies making use of every financial facility offered by the Liechtenstein Government in order to reduce the taxes a company or an individual must pay. Our Liechtenstein company formation agents can offer more information on the taxation system of the Principality.
First of all, the advantageous tax system applies only to tax residents of Liechtenstein. For this purpose, a company must have a registered address in the Principality of Liechtenstein, while foreign citizens must pay the taxes related to their employment here. Liechtenstein companies will benefit from a 12.5% corporate tax rate, which is one of the lowest in Europe which already a great tax minimization solution.
Employees of companies Liechtenstein, on the other hand, can deduct many of the costs related to the employment. Among these are living, commute and education costs. These are very advantageous tax minimization solutions for foreign managers of companies in Liechtenstein.
It is also good to know that Liechtenstein does not levy any gift or property taxes compared to other European countries, which is why owning real estate is a very useful tax minimization tool in Liechtenstein.
Double taxation agreements are one of the most employed solutions for minimizing taxes in Liechtenstein. Most foreign companies with subsidiaries or branch offices can claim the taxes paid in Liechtenstein in their home country in accordance with the provisions of the double tax treaties. The foreign tax relief can be granted as a credit or an exemption.
Also, Liechtenstein does not impose any interest or royalties taxes, while dividend payments are subject to a 2.5% tax rate if they were accrued before January 1st, 2011.
For full information on all the tax minimization solutions available in the Principality or if you want to open a company in Liechtenstein, please feel free to contact our company registration representatives.