Liechtenstein is chosen by many foreign investors who want to start a business in a country where they can benefit from incentives granted by the local authorities for the commercial entities.
The small country situated between Austria and Switzerland is known mostly for its capital, Vaduz, that is a financial center interconnected with other important cities all over the world. Liechtenstein has a secure and developed financial sector, an attractive insurance industry, investment funds, and an asset management sector.
The process of company incorporation in Liechtenstein doesn’t take long if all the documents are properly submitted and it can last a few weeks. The foreign entrepreneurs must choose the right type of company to establish considering various aspects such as the share capital, the objectives and the total number of shareholders.
Types of Liechtenstein entities
The main forms of companies that can be incorporated by an entrepreneur who wants to open a company in Liechtenstein are:
- limited liability companies (also known as GmbH), which is the most employed type of company;
- foundation (Stiftung), which is very sought due to the many tax advantages it offers;
- establishment (Anstalt) – this a unique business form which can be created in Liechtenstein;
- trust enterprise, which is also a specific business form available in Liechtenstein.
A form of business specific to the small and medium businesses is the limited liability company (Gesellschaft mit beschränkter Haftung or GmbH) which has to be established with a minimum capital share of EUR 30,000. This type of company can be used for commercial and non-commercial activities, will have a board of directors and it needs a local registered office. In case you need a virtual office for your business, our company formation specialists in Liechtenstein can offer you a registered address where you can find everything you need.
Another type of company you can open in Liechtenstein is a company limited by shares, for which you need a minimum share capital of EUR 50,000. The company formation process is similar to that of an LLC and the main difference between the two types of companies is that the private limited company has an increased transferability of shares and a larger capital. The corporate tax to be paid by both types of companies is the same - 12.5% and both need minimum one shareholder and a registered office.
The foundation cannot be used for international commercial trading, but as a holding company or investment holding company. It doesn’t need a board of directors or shareholders and the minimum share capital is EUR 30,000. Besides the corporate tax, it must pay a net assets tax at a rate of 2.5% and it needs a registered office.
The establishment can be used for commercial activities, as a holding or investment company, and it needs a minimum share capital of EUR 30,000.
The trust enterprise can act as a holding company and the minimum share capital is EUR 30,000.
Subsidiaries, branches and liaison offices in Liechtenstein
Foreign companies interested in opening a company in Liechtenstein have three options:
- the subsidiary which an independent legal entity;
- the branch office which is a satellite of the parent company;
- the liaison office which is a not a legal entity and can only undertake non-commercial activities.
Foreign companies seeking to establish a business form in Liechtenstein will choose the structure in accordance with their objectives.
The most chosen business forms are the subsidiary and the branch office, and the main differences between them reside in:
- the degree of independence: the subsidiary is an independent business form, while the branch office is not;
- the branch office will only complete the activities of the parent company on the Liechtenstein market, while the subsidiary can offer other services as well;
- the subsidiary will take the form of a limited liability company most of the times compared to the branch office;
- from a taxation point of view, the subsidiary will be taxed on its worldwide income while the branch office will be taxed on the income derived from Liechtenstein.
The Liechtenstein representative office, on the other hand, can be established for a limited period of time and at the end of that period, it can be turned into a branch office or a subsidiary.
Our company registration consultants in Liechtenstein can advise on all these business forms.
You can also find out from the video below what the main steps for setting up a company in Liechtenstein are:
Company incorporation in Liechtenstein
The main steps an entrepreneur must take in Liechtenstein before starting to perform commercial activities are notarizing the company’s articles of association, opening a bank account and depositing the minimum share capital, checking the name availability in the Public Register and depositing the above at the Liechtenstein Public Registry.
If the company has an annual turnover above EUR 100,000, it must also register for VAT. Social services must also be notified if the company will hire personnel. The whole process of establishment of a new company doesn’t take longer than a week.
- the shareholders’ identification papers which must be notarized;
- proof of having a registered address in Liechtenstein, under the form or a lease or rental contract;
- the company’s memorandum and articles of association which must be drafted and notarized;
- information about the company’s manager or managers, such as their identification papers and qualification;
- the bank reference indicating the share capital was deposited in the Liechtenstein bank.
It should be noted that any company registered in Liechtenstein is required to appoint a resident director. Also, the director must have a clean criminal record, as an extract from the police department will be required from the police department. The extract must be filed with the Trade Registry in Liechtenstein together with proof of the qualifications of the director.
The provisions of the Company Law in Liechtenstein
The Commercial Code was last amended in 1999 when new provisions were incorporated in it. This way, the legislation regarding companies in Liechtenstein is compact. The Commercial Law in Liechtenstein also comprises:
- the Bank and Finance Companies Law;
- the Law on Investment Undertakings;
- the Law on the Supervision of Insurance Companies;
- the Law on the Provision, Control and Distribution of the Prospectus of Public Companies;
- the Law on Professional Due Diligence in the Acceptance of Assets.
One of the most important provisions of the new Commercial Code refers to the creation of companies registered for investment purposes.
Requirements to register a company in Liechtenstein
The first part of the Company Law specifies the requirements for opening a company in Liechtenstein. According to these provisions, the most important one is for the company to have a registered address (place of management) in Liechtenstein. Also, all types of companies must be recorder with the Trade Register in order to be recognized by the authorities.
The Liechtenstein Commercial Law also stipulates that both natural persons and corporations are allowed to set up business in the Principality. These must clearly state the objects of activity when registering a business here. These activities must appear in the articles of association of the company.
The articles of association when opening a company in Liechtenstein
The entities are governed by specific bodies, formed by natural persons or corporate bodies. Major decisions are taken by the multiple member body. The decisions are valid only if the majority of the members vote for them (unless stipulated otherwise by the founding acts).
The domiciles of the legal entities are usually established where the administrative center is. Our company registration agents in Liechtenstein can assist with the preparation of the articles of association of a company.
The Company Act provides for the content of the articles of association of a company in Liechtenstein which must be drafted in accordance with Article 389 ff in the afore mentioned law. The first article in the statutory documents must state the name of the company, its registered address and the duration of the company which can be limited to period of time or unlimited.
- the purpose and the object or objects of activity of the company;
- the shareholders;
- the management structure of the company;
- the share capital of the company;
- the date of the annual general meeting;
- how the shares are divided;
- how the share capital can be altered;
- the rights and obligations of each shareholder;
- details about the dissolution and liquidation of the company.
Apart from these, the articles of association in Liechtenstein may also contain special provisions.
Special provisions in the articles of association in Liechtenstein
Apart from the information mentioned above which is mandatory when opening a company in Liechtenstein, the shareholders also have the possibility of customizing the articles of association of their companies by including special provisions related to the management of the company, such as how the directors or managers can be appointed or dismissed or clauses related to the resolution of possible disputes.
S&P’s latest rating for Liechtenstein
The latest rating received by Liechtenstein was issued by the Standard and Poor’s agency in June 2018. More than a new issuance, S&P renewed its rating for the Principality. According to the latest report, Liechtenstein was rated AAA/A-1+ with a stable outlook.
By 2020, Liechtenstein is expected to have an average 1.6% surplus, which is what determined S&P provide a stable outlook until the next rating is issued.
S&P’s report also indicates Liechtenstein to keep up with the latest international regulatory regimes in terms of taxation and financial services. The increasing revenue collected from taxes is also expected to be maintained by the government over the next two years.
Other recent ratings for Liechtenstein
Not only S&P rated Liechtenstein AAA, but the other major agencies have also issued good ratings for the Principality during the last year. Among these Moody’s rated Liechtenstein Aaa, while Fitch rated the Principality AAA. These were long-term ratings Liechtenstein received in the past year. Just like S&P, the other two agencies also offered a stable outlook for the Principality.
Why does Liechtenstein receive such good ratings?
First of all, Liechtensteinis considered a “reputable financial center” in Europe which is why its economy is very stable. This economy is based on a good regulatory framework and standards meeting the greatest standards. According to all agencies, Liechtenstein receives such good ratings because:
- it has a stable society;
- it has a sound company legislation;
- it has a sound tax legislation;
- it has good infrastructure;
- it has little to no bureaucracy.
Also, with the Swiss franc as its official currency, Liechtenstein has low-interest rates on loans. The small country is also considered to have several niche products addressed only to the EU markets.
Why invest in Liechtenstein?
All credit rating agencies assessing Liechtenstein consider this country is one of the most important countries in Central Europe. Foreign investors are drawn to Liechtenstein because:
- Liechtenstein has a great opening to the European market, including to that of EU countries;
- the Principality is one of the richest countries in the world if we consider the per capita income;
- its strongest industry is manufacturing, Liechtenstein managing to shift the attention of investors from the financial industry;
- the financial industry remains one of the most attractive investment sectors in Liechtenstein with new regulations being implemented all the time;
- Liechtenstein also relies on an excellent telecommunications infrastructure;
- it is one of the few countries in the world open to investments in cryptocurrency and blockchain technology.
Questions related to starting a business in Liechtenstein
Foreign enterprisers who want to open companies in Liechtenstein usually have many questions related to the procedure, but also to their rights and obligations. Below, our advisors have answered some of these questions:
How fast can I open a company in Liechtenstein?
The whole company registration procedure in Liechtenstein takes about one month, however, in certain cases, this period can be longer.
Even though Liechtenstein is not considered a big state and lacks the natural resources, it managed to develop an industrialized economy with many incentives for foreign and domestic investors. It has a strong a well-developed economy and GDP (gross domestic product) of $141,100 per capita, which places Liechtenstein in the second place in the world.
Especially the small businesses are highly developed and encouraged by the authorities. Since 2011, a corporate tax of 12.5% was introduced and it’s considered one of the smallest in Europe. No withholding tax is required for dividends paid to a foreign company.
The registration for VAT is mandatory only if the annual turnover exceeds CHF 10,000. The VAT rate is among the smallest (8%) and, in certain cases, a small rate is applied (2.5% for food, beverage, medicines, newspapers or 3.8% for accommodation). Being a member of the European Economic Area (connection between the European Free Trade Association and the EU) since May 1995 is granting access to many foreign markets. It has a customs union with Switzerland and the currency used by this state is the Swiss Franc. No control on foreign exchanges is performed, this attracting the foreign investments.
The above has managed to build a credibility image for Liechtenstein all over the world and it’s attracting foreign investments every year. This small country is the host of over 4,000 companies and has a population of around 37,000 inhabitants.
If you are interested in setting up a company in Liechtenstein or other company formation services, you may contact our specialists in company incorporation. They can put you in touch with other company formation specialists in other countries, such as Bahrain, Cayman Islands etc. if you are interested in company formation services.
Call us now at +41 41 266 0070 to set up an appointment with our specialists in company formation. Alternatively you can incorporate your company without traveling to Liechtenstein.
As our client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Liechtenstein.
The team from CompanyFormationLiechtenstein.com is very qualified and benefits from extensive expertise in this area. I would definitely recommend them to any entrepreneur decided to start his own business here.
Mihai Cuc, Partner of
Enescu&Cuc; Law Firm www.romanianlawoffice.com