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Taxation of Investment Funds in Liechtenstein

Updated on Saturday 30th September 2017

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The foreign businessmen and companies who choose to invest in a fund in Liechtenstein will benefit from important advantages related to taxation.

This small country is a well-known financial center where nearly 750 investment funds are opened, with a total value of around CHF 37 billion.

The investment funds that have a registered office in Liechtenstein have to pay the income tax at 12.5% applied to the taxable net income and with a minimum value of CHF1,200.

You can rely on our company formation advisors in Liechtenstein if you want to set up an investment fund in the Principality.

Taxes applies to fund vehicles in Liechtenstein

In order to create a fund in Liechtenstein, an investor must first choose a company which will serve as a structure for the administration of the fund. These fund vehicles can be corporate or non-corporate entities which will be taxed according to the tax legislation applicable in Liechtenstein. While fund set up by using a corporate vehicle, such as investment companies with variable or fixed capital will be subject to the corporate tax rate mentioned above, funds created by using a non-corporate vehicle such as a contractual fund will be subject to the income tax in Liechtenstein.

In order to be applied the income tax, a fund or the management company administering it must be registered in Liechtenstein. The same law specifies that the corporate income obtained from the assets managed by the fund will be exempt from the corporate tax applied to the net income.

Our company registration agents in Liechtenstein can explain the provisions of the Tax Law.

The video below shows how Liechtenstein investment funds are taxed:

The stamp tax applied to investment funds in Liechtenstein

Considering Liechtenstein follows certain tax regulations imposed in Switzerland, those interested in opening an investment fund in the Principality should know that a stamp duty will be levied upon the formation of the company managing the fund. The value of the stamp duty is 1% and applies to legal entities.

The transfer of securities of an investment fund will also be taxed upon the change of ownership of the respective securities. The tax will be divided between the issuer and the buyer of the securities.

The benefits of taxation in Liechtenstein

An important benefit is that the dividends obtained from investments in legal entities are exempt from income tax, as well as the capital gains obtained after the liquidation of investments in legal entities. There is a tax of 1% applied at the issuance or increase of the nominal value of the shares and this is for public limited companies and public EU companies that are in charge with the management of the investment fund in Liechtenstein. The same rate is applied in case of investment companies with fixed capital.

There is no tax in case of the shares of the investment company with variable capital. There is a tax exemption for properties and there is a special taxation rule for the legal entities named PVS (Privatvermögensstruktur).

The investment funds on a contractual basis are not subject to pay the income tax on their income and on their net wealth.

The investment funds with variable or fixed capital don’t have to pay the income tax for the investments in the fund or for its income and there is no withholding tax for the distribution to the holders of units in the fund. The individuals who are residents in Liechtenstein are exempt from income tax on the incomes obtained from an investment fund.

For more information about the taxation of investment funds in Liechtenstein, you may contact our company formation consultants in this country who will help you open any type of fund or company available in this country.

 

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