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Company Formation Liechtenstein



Liechtenstein-Luxembourg Double Tax Treaty

Updated on Monday 12th February 2018

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Liechtenstein is one of the most prolific financial centers in Europe and many foreign investors set up companies in various industries here. In order to help these investors to repatriate profits as easy as possible and with the least possible impact on the taxes they pay, Liechtenstein has signed numerous double taxation treaties.

In 2009 Liechtenstein signed a double taxation agreement with Luxembourg. The treaty was enforced in stages, as it follows:

  • -          Liechtenstein enforced the agreement in 2010;
  • -          Luxembourg enforced in 2011.

Our company formation agents in Liechtenstein can offer information on all the Principality’s double taxation treaties.

What does the Liechtenstein – Luxembourg tax treaty provide for?

The agreement for the avoidance of double taxation between Liechtenstein and Luxembourg provides for the following taxes:

  • -          the income, the corporate, the property and the trade taxes in Luxembourg;
  • -          the income, the corporate, the coupon, the property and the income on real estate taxes in Liechtenstein.

The tax treaty also covers similar taxes imposed in Liechtenstein and Luxembourg.

Another important provision of the Liechtenstein – Luxembourg double tax treaty covers permanent establishments of companies registered in the contracting states which carry out operations in the other country for a minimum period of 12 months. The incomes of these entities will be taxed in the country where the activities are undertaken. This is the of branch offices registered by companies in one country in the other state.

You can rely on our company registration consultants in Liechtenstein if you want to open a branch office here.

The double tax treaty between Liechtenstein and Luxembourg also provides to the avoidance of double taxation of income earned by company directors, sportsmen and professors.

Avoidance of double taxation in Liechtenstein and Luxembourg

The avoidance of double taxation in Luxembourg will occur through the tax credit and exemption methods. With respect to Liechtenstein, double taxation will be avoided through the same methods. It should be noted that the means of avoidance of double taxation will depend on the type of income.

The Liechtenstein – Luxembourg double taxation treaty also provides for the following reduced tax rates:

  • -          a 0% rate on dividend payments for which the beneficial owner holds at least 10% of the shares in the company paying the dividends;
  • -          a 5% rate on dividend payments if the beneficiary owns at least 10% of the capital of the company paying them;
  • -          a 15% rate on other dividend payments;
  • -          a 0% rate on interest payments;
  • -          a 0% rate on royalties payments.

Our company registration advisors can explain the taxation system in Liechtenstein.

Exchange of information between Liechtenstein and Luxembourg

Most of Liechtenstein’s double taxation treaties which were renewed in the past few years contain provisions related to the exchange of tax information. This is because the Liechtenstein government has amended the country’s fiscal policy in order to provide for more tax transparency.

The amended double taxation agreement with Luxembourg follows the same model created by the OECD and provides for the exchange of tax information between the two states. The clause is very important considering both countries are among the best known financial centers in Europe.

Until recently Liechtenstein was in a grey area when it came to tax transparency, however the government has started amending its tax conventions in order to enhance the taxation system. Officials have also announced that Liechtenstein is ready to sign agreements which provide solely for exchange of tax information.

For full information on the double tax treaty with Luxembourg, please contact our company formation representatives in Liechtenstein.


Meet us in Vaduz

Call us now at (+44) 203-287 0408 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.

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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

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