Liechtenstein is a member of numerous international organizations and bodies. Among others, it is a member of the Council of Europe, the United Nations (UN), the European Free Trade Association (EFTA) and the Organization for Security and Co-operation in Europe (OSCE). Since 1923, there has been a Customs Union Treaty with Switzerland through which Liechtenstein was integrated into the Swiss economic zone. After two successful popular votes (1992 and 1995), Liechtenstein joined the European Economic Area (EEA) on 1 May 1995.
Following the different outcome of the popular votes on the accession to the European Economic Area in Liechtenstein and in Switzerland, the Customs Union Treaty was modified or adjusted so as to allow Liechtenstein both the close partnership relationship with the Switzerland (customs union treaty) and accession to the European Economic Area. Thus Liechtenstein belongs to two economic areas at the same time.
At the multilateral level, Liechtenstein has adhered to numerous important agreements in the fields of law, economy, culture, education, environmental protection, health, transport, telecommunications, etc. Bilaterally, Switzerland is Liechtenstein’s most important contractual partner. It has also concluded decisive agreements with many other countries, which are extremely important for foreigners, as they facilitate, for example, access to education or the recognition of diplomas and degrees, or concern the social insurance sector. As Switzerland did in 2008, Liechtenstein will also join the Schengen area in 2010.
The “Schengen” agreements allow the free movement of citizens belonging to Schengen states thanks to the abolition of controls at internal borders. Citizens from non-Schengen states are required to apply for a visa as long as there are no exemption agreements. In this regard, you can request information from the Foreigners and Passports Office (Ausländer- und Passamt; see “Addresses”).
Main sectors of industry
Agriculture and livestock. Very little importance is now occupied by agriculture: the main crops are those of cereals (corn), potatoes and vegetables. The presence of vast extensions of meadow and permanent pasture, equal to about 16% of the territory, has allowed a moderate development of breeding; cattle feed a rational dairy industry.
Industry and tertiary sector. Instead, it is the manufacturing and tertiary activities that ensure the country’s great prosperity. The industry is essentially based on precision metalworking and high-tech productions, such as scientific instruments and electronic equipment, as well as food, chemical, pharmaceutical complexes and traditional weaving.
Communications and commerce. The territory is crossed by good rolling stock which connects it with the Swiss and Austrian road networks; an 18.5 km section of railway crosses the country from west to east on the Buchs (Switzerland)-Feldkirch (Austria) line. International trade is very active, especially with Switzerland. In addition to the proceeds of the ever-thriving tourism, Liechtenstein draws significant benefits from a banking system and a tax regime that is very well disposed towards foreign capital: it is estimated that around 30,000 are the financial companies registered in the country. In 1980, however, Liechtenstein adopted a new law that tends to control the activities of foreign industries.
Taxation for businesses in Liechtenstein
Liechtenstein is a small mountain country wedged between Switzerland and Austria has a basic personal income tax of 1.2%. However, the different municipalities of Liechtenstein levy an additional income tax which leads to a combined income tax of 17.82%. An additional income tax applies for persons under the social security program and for the self-employed. For the latter category, an additional 11% is implied, so the income tax becomes almost 29%.
The corporate tax rate in Liechtenstein is 12.5% and it is an important source of income for the government. Liechtenstein resident companies must pay corporation tax on their worldwide income. Non-resident companies have to pay corporation tax only on income earned from properties or branches within Liechtenstein.
Value added tax in Liechtenstein is 7.7%, except for products to which a rate of 2.5% applies (e.g. food, medicines and books). A reduced rate of 3.7% applies to accommodation and accommodation. Tourism is an important economic activity for this Alpine country.
Investing in Liechtenstein
In first place among the advantages of opening a company in this country is the excellence of banking secrecy: foreign investors in this country are protected and protected, but there is a very careful selection, with requests for references and capital of a certain value. For example, there is a minimum deposit of €1,000 for personal accounts, and there are no transit accounts. Banking secrecy is well protected and its violation carries heavy penalties. There are no controls on incoming and outgoing currencies. Opening a current account in Liechtenstein takes a few days, and is especially useful if the sums to be paid are large.
When opening a company in Liechtenstein, you will find plenty of reasons to do so. First of all it is good to know its territory and its productive sectors. Know that agriculture, the textile industry and winter tourism are excellent assets for investors. When doing business in Liechtenstein, you will especially appreciate the confidentiality of its banks. In fact, your accounts will not be in danger of revelations.