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How to register company in Liechtenstein

The Principality of Liechtenstein appeared on the map in the early 18th century. It is one of the smallest states in Europe. It finally became an independent jurisdiction in 1866. It borders Switzerland in the south and west and Austria in the east and north. The country is not a member of the European Union, but it is a member of the European Economic Area and an essential part of the Schengen zone.

Participation in European integration processes means consistent changes in national corporate and tax legislation, so Liechtenstein lost its controversial reputation as an offshore long ago. However, foreign entrepreneurs continue to open their companies in Liechtenstein. Let’s find out what attracts foreign businesspeople to this small country.

7 advantages of registering company in Liechtenstein

  1. Mild tax legislation

    The country has one of the lowest corporate income tax rates in the world at a rate of 12.5%. Value Added Tax (VAT) is charged at a rate of 7.7%. Dividends received by a Liechtenstein company from other companies are generally tax-free.

    Some types of business in Liechtenstein, such as investment funds, are not taxed at all. The profits generated by their work are distributed among the beneficiaries who must pay income tax at their place of residence.

    In addition, double taxation treaties with other countries also help save on fiscal payments.

  2. Convenient access to two prospective markets

    The Swiss franc is Liechtenstein’s currency. Liechtenstein forms a customs union with Switzerland.

    This high level of integration into the Swiss economy and the European Economic Area gives registered Liechtenstein companies free access to two large and rich markets for the sale of goods and services.

  3. Political and economic stability

    One of the main advantages of doing business in Liechtenstein is a favourable economic environment with a stable political system and the highest international AAA credit rating.

    In other words, you can plan your company’s development in Liechtenstein for years without any fear that someone will seize your business or your capital will be frozen for suspected illegal activities.

  4. Good investment climate

    Ambitious start-ups and foreign investors know that it is easy to find investments in Liechtenstein for a promising project or become a shareholder in a reliable and profitable investment fund. An additional advantage is the absence of foreign exchange control. However, it is worth remembering that some types of activity require a licence.

  5. Reliable banking system

    A company registered in Liechtenstein can open a bank account at its place of incorporation, in Switzerland or any other country within the European Economic Area.

  6. Skilled international workforce

    Liechtenstein’s small size and its close location to Switzerland and Austria make it possible to employ qualified specialists from three countries at once.

  7. Simple registration process and quality service

Liechtenstein has created many convenient organisational and legal forms for foreign entrepreneurs. The government provides businesses with high-quality and fast service, and all interaction with government agencies is mainly online or via phone.

Advantages of registering company in Liechtenstein

Lichtenstein is often chosen for the following reasons:

  • To protect assets by transferring them to a company in a reliable and neutral jurisdiction;

  • To set up a shareholding company. Liechtenstein holding structures are often used to own and manage shares in foreign companies;

  • To establish an investment fund on favourable terms;

  • To register an international trading company for domestic, Swiss and EU operations;

  • To open a company to effectively manage intangible assets (intellectual property licences, trademarks, etc.).

Foreign entrepreneurs have a choice of the following legal forms of incorporation:

  • Public Limited Company (AG) — this type of company makes up to 50% of the business in Liechtenstein. PLCs are chosen when a large share capital (from CHF 50,000) and a certain status are required;

  • Private Limited Company (GmbH) is the standard option for trading companies. Founders of a GmbH only risk their share in the company’s share capital, totalling at least CHF 10,000. However, the authorised capital of a Liechtenstein company can be calculated not only in the national currency but also in American and European currencies;

  • Anstalt is a unique legal entity under Liechtenstein law, something between a limited company and a private investment fund.

Anstalt is most often used to register small companies with a single founder who also acts as a director. Anstalt can be also structured as a PLC or private fund. It can be used as a trust for the trust management of real estate outside Liechtenstein;

  • Stiftung, a private or family fund, is used to preserve and increase the assets of companies and wealthy individuals and to transfer family capital to the adult children of the founders after several years. Stiftung is different from other legal entities due to a higher degree of confidentiality and the possibility of concealing information about ultimate beneficiaries;

  • Trust — this type of organisation allows assets (property, companies, etc.) to be transferred to trustees to preserve and profit.

Requirements for Liechtenstein companies

All companies registered in Liechtenstein are required to have an office in Liechtenstein, where information about the management, shareholders and other employees will be held along with financial accounts (if you are opening a medium-sized or large company).

Additional requirements in Liechtenstein apply to PLCs:

  1. PLCs are required to nominate a so-called resident agent — a person or company that liaises with the government authorities on behalf of the AG. Liechtenstein residents, Swiss or EEA residents can fulfil the role of a resident agent. If a legal entity acts as a resident agent, the company must be registered in Liechtenstein;

  2. PLCs need an auditor whose functions can be fulfilled by the company:

    • An individual (provided that they do not directly or indirectly own shares in the audited company);

    • A legal entity (provided that this audit company is not owned by the audited PLC).

    The law requires an auditor to remain independent, so they cannot also be a member of the board of directors of the audited business entity.

  3. Finally, a PLC must have a board of directors, which may include one or more individuals and/or legal entities;

One of the directors must be a resident, i.e. a citizen of Liechtenstein, Switzerland or a member of the European Economic Area, permanently residing in Liechtenstein, possessing appropriate professional qualifications and acting as the company’s resident agent.

The requirements listed above are particularly relevant for “active” companies. According to the traditional definition, an active business generates most of its profits from commercial activities such as trade or services. Passive sources of income, such as royalties for the use of intellectual property or dividends, should account for no more than 20% of the total revenue.

Share capital

An important requirement for starting a company in Liechtenstein is the contribution to a share capital by depositing money into a bank account. For medium-sized and large PLCs, the authorised capital is CHF 50,000, and it must be paid in full.

As Liechtenstein is an EEA member state, it won’t take you a lot of time to open a bank account in the country. It is sufficient to provide a letter in English from any other EU or Swiss bank where a special account has been set up in advance.

Process of registering company in Liechtenstein

Experienced entrepreneurs do not mind spending money when it comes to important things, so they hire well-established advisors to open a company in an unfamiliar jurisdiction.

The procedure for starting a new company in Liechtenstein does not differ much from similar steps in other European countries. The whole process can be divided into five stages:

  1. You analyse the available legal forms of business organisation in Liechtenstein and choose the one that best suits your needs;

  2. It is time to find a suitable name for your company;

  3. Once you have chosen a name and, with the help of a corporate lawyer, checked that it meets the Registrar’s requirements, you must gather the necessary documents:

    • Documents for company registration: notarised passport copies; a proof of residential address; a police clearance;

    • If another company is a shareholder, you need copies of its constituent documents;

    • Articles of Association. Your articles of association should include a purpose for setting up a company and your plans;

    • Resolution about the incorporation;

    • Information on the management, shareholders and beneficiaries;

    • Information on the share capital and shares of the company;

    • Samples of signatures of the directors;

    • A completed official Trade Register application form. The application form should be filled in with the assistance of an experienced advisor. It is important to provide the exact name of your company and its registered office in Liechtenstein. There is a fee for company registration, which must be paid in advance.

    • A bank letter confirming that the authorised capital has been paid should be also included in the pack of supporting documents.

  4. We mention the bank separately because signing an agreement with a bank in Liechtenstein is a complicated and time-consuming process that takes 3 to 5 weeks. Fortunately, the rules do not prohibit shareholders from holding share capital in any other European bank if it is in Switzerland or a European Economic Area state.
  5. Obtaining a work permit. Registration of a commercial company is not sufficient ground for an active business activity. Especially if sales of goods or services will be at least partially carried out in Liechtenstein. You will need to register your company and obtain a business licence to do business in Liechtenstein.

Opening a company in Liechtenstein takes about a month from the first consultation with an advisor to receiving the statutory documents and certificate of incorporation. The authorities decide on your application within 2 weeks, while the rest of the time is spent on preparing documents, finding a local director and legal address, and courier delivery.

Unfortunately, we cannot provide more details about many other aspects of running a business in this wonderful country such as new ways of tax optimisation or peculiarities of newly established business structures liaising with government authorities.

However, if you consult Imperial & Legal’s qualified advisors, they will not only help you register a company in Liechtenstein but also advise what benefits are available to your business. Moreover, there are many unique opportunities in the corporate and tax legislation allowing you to save on taxes legally and recover the considerable costs of running a company.

FAQs about Registering Company in Liechtenstein

Why is Liechtenstein not an offshore zone?

Tax havens offer foreign entrepreneurs three unique advantages:

  1. The ability to pay no taxes on foreign profits. Sometimes offshore companies simply charge an annual fee for registration renewal or a fixed (lump sum) tax;

  2. Confidentiality — the ability to conceal the names of the beneficiaries of the company, and in some cases, the directors;

  3. Abridged or no financial accounts.

Liechtenstein can only offer no direct tax on some business structures (e.g. investment funds) and the lowest corporation tax rate in Europe. However, all these advantages are a sign of a low-tax jurisdiction rather than an offshore jurisdiction.

As for confidentiality, in most cases, there is no confidentiality for directors and beneficiaries of companies. It is not possible to conduct serious business in Liechtenstein without financial accounts and audits.

What is the advantage of investment funds in Liechtenstein compared to other European countries?

Here are the most obvious advantages:

  • Investment funds in Liechtenstein are a great solution to finance “micro-projects” whose value does not exceed €5,000,000-€7,000,000;

  • The costs of opening and maintaining such a fund are considerably lower than in other European jurisdictions;

  • An investment fund in Liechtenstein does not pay any taxes. Tax liabilities arise only for the shareholders after the income has been distributed;

  • The investment fund does not need to establish a substance in Liechtenstein to carry out its activities;

  • As the country is an EEA member state, the fund can attract investments across all European countries that are part of the Schengen area;

  • The establishment and authorisation of an investment fund in Liechtenstein takes no more than 2 months.

What reports do companies registered in Liechtenstein need to prepare and submit if all business activities are conducted abroad?

In many cases, even companies that do business outside Liechtenstein are still required to keep bookkeeping records, prepare (and in some cases submit) annual accounts and get audited.

To learn more about preparing and submitting your Liechtenstein accounts on time, make an appointment for a consultation with our advisors.

Is opening a company in Liechtenstein a sufficient ground for obtaining a residence permit?

Registering a company in Liechtenstein is not a sufficient argument in your favour, even if you have invested a considerable amount of money in your business.

This jurisdiction does not need foreign investments and does not “sell” residence permits for contributions to the economy. Moreover, this small European country with a population of less than 40,000 people receives no more than 30 immigrants a year from the European Economic Area and no more than 6-8 people from other jurisdictions, such as Eastern European countries, the United States, and Japan.

To summarise, a businessperson will not be automatically granted a residence card because they set up their company in Liechtenstein. But if the project is beneficial to the country, creates new jobs, improves the environment, implements technical innovations, or introduces fundamentally new and useful products to the market, this will be an additional argument in favour of the applicant. The application will have a better chance if it turns out that the effective operation of the company requires the applicant’s presence, and their current place of residence is very far from Liechtenstein.

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