Liechtenstein To Reform Tax Law

by Ulrika Lomas, Tax-News.com, Brussels

23 January 2009

During a meeting held earlier this week, the Liechtenstein government has approved a consultation report, designed to radically reform the country’s tax law.

The reform, which seeks to modernise the existing tax law, contains the following key initiatives:

• Provision of significant tax relief for families.
• The abolition of estate, inheritance and gift tax.
• The introduction of a more generous tax exemption.
• The abolition of special company taxes.
• The implementation of a uniform tax rate of 12.5%, levied on earnings of taxable legal entities operating commercially in Liechtenstein, and supplemented by a real estate gains tax.
• The abolition of capital and coupon tax, and the tax on dividends.
• The introduction of modern group taxation for companies within a corporate group, in a bid to avoid internal double taxation.

According to Prime Minister and Minister of Finance Otmar Hasler: “The goal of the reform is to preserve and improve the national competitiveness and international attractiveness of the Liechtenstein location for businesses and financial service providers for the long-term”.

He added: “With this reform, we will make Liechtenstein even more attractive, especially as a corporate location, which constitutes an essential basis for the sustainable prosperity of our country in the 21st century".

Although the tax reform is not forecast to affect the long-term generation of revenue for Liechtenstein’s budget, short-term tax losses are anticipated. However, it is expected that these losses will be outweighed by Liechtenstein’s improved competitiveness in the longer term.

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