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VAT in Liechtenstein

Updated on Sunday 05th November 2017

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Value-added-tax -in-Liechtenstein

Liechtenstein’s taxation system is comprised of direct and indirect taxes. While direct taxes include the income and the corporate tax, the most familiar indirect tax is the value added tax (VAT). Liechtenstein introduced the VAT in 1995. An interesting fact is that Liechtenstein follows the same VAT regulations as Switzerland, therefore any changes brought by the Swiss tax authorities to the VAT system were adopted by Liechtenstein. This is because the Principality of Liechtenstein is part of the European Economic Area just like Switzerland.

Our company registration consultants in Liechtenstein can offer more information on the country’s taxation system.

 

Legislation related to taxation in Liechtenstein

The main law providing for taxation in Liechtenstein is the National and Municipal Tax Code. However, the value-added tax is also governed by VAT Law and by the Stamp Tax Law, both applicable in Switzerland and Liechtenstein.

Foreign investors who want to open large companies in Liechtenstein are required to register for VAT as a mandatory step in the company registration procedure. Our local agents can assist with the incorporation of a joint stock corporation in the Principality.

You can find out from the video below how the VAT is applied in Liechtenstein:

 

Value added tax rates in Liechtenstein

The standard VAT rate in Liechtenstein is 8%. However, reduced rates also apply, as it follows:

  •          -          a 2.5% rate to the delivery of certain products among which foodstuff, medicines, books and newspapers;
  •          -          a 3.8% rate applies to accommodation services.

There are also services such as education, healthcare, banking and social security which are exempt from paying the Liechtenstein value added tax.

How does the VAT apply in Liechtenstein?

Both individuals and companies in carrying out commercial activities in Liechtenstein are liable to pay the VAT. The company or the sole trader will impose the VAT on the final products or services they sell, respectively offer. The value added tax is added to the price of these goods or services and once collected it is forwarded to the tax authorities. In order to be collect this tax, all companies are required to register for VAT in Liechtenstein.

Our Liechtenstein company formation agents can offer more information on VAT registration.

VAT registration for companies in Liechtenstein

Not all companies and individuals are required to register for VAT in Liechtenstein. Commercial activities resulting in a yearly taxable income below the 100,000 CHF threshold are subject to voluntary VAT registration in Liechtenstein. It is important to know that EU value added registration regulations do not apply in Liechtenstein, as this country is not part of the European Union.

Filing VAT returns in Liechtenstein

All companies collecting the value-added tax in Liechtenstein are required to file returns with the local tax office. VAT returns in Liechtenstein must be filed on a quarterly basis (every 4 months). At the same time, companies must also remit the amounts collected to the authorities.

In certain cases, exceptions can be made, and monthly VAT filings can be submitted.

It should be noted that the VAT can be claimed back by foreign citizens who have made a purchase in Liechtenstein. The refund can be given on taxable goods or services based on an invoice.

Changes announced on the VAT in Liechtenstein

According to recent announcements made by the Liechtenstein government, the standard VAT rate will be reduced starting with January 2018. The new rate will be 7.7% from the current 8%. The rate related to hotel services will also be lowered from 3.8% to 3.7%. However, the 2.5% VAT rate applicable to the supply of certain goods will remain unchanged.

For information about the value added tax or if you want to open a company in Liechtenstein, do not hesitate to contact us.

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