Liechtenstein is a micro state – a constitutional monarchy – located between Austria and Switzerland. Covering just over 60 square miles, it has fewer people than a neighborhood in a large city – less than 40,000.
With all these, Liechtenstein has a few different municipalities, and its capital is located in Vaduz. Now, here comes the interesting part. From a financial point of view, Liechtenstein is among the countries with the highest GDP per person in the world.
Back in the day, Liechtenstein was known as a tax haven – not suitable for everyone, but mostly aimed at millionaires. Laws have changed though, as it used to be blacklisted by many countries. These days, Liechtenstein is part of the Schengen area, yet not part of the European Union.
Liechtenstein company formation can be challenging because Liechtenstein has always been associated with billionaires. However, you do not have to be a high net worth individual to register a company there. Here is what you need to know.
Why Incorporate in Liechtenstein
Liechtenstein has adopted many laws and regulations from Switzerland, with small twitches here and there. It has become a prolific business environment and features laws that attract foreign investment like never before.Take the VAT, for example. The general VAT rate is set at 7.7%. Then, it also depends on the industry you are part of. If you operate in drugs, books, magazines, newspapers, or food, you will have a reduced rate of 2.5%.
On a similar note, those operating in accommodation will also benefit from a rate of 3.7%. Such numbers may seem unusual to many. After all, most countries in Europe have much higher VAT rates – usually floating around 20%.
Now, things go even further – where do you plan to do business? For instance, you could register a company in Liechtenstein and source your income abroad – such as having an online business or a business offering services in other countries.
If your income is sourced from abroad, you are exempt from taxation. You are not liable for any kind of national taxes. You can forget about the income tax or the corporation tax. The same rule applies to capital gains taxation.
Although it is impossible to go fully anonymous these days (especially in a European country), the truth is Liechtenstein still offers a high degree of confidentiality. It is not anonymity, but it adds a bit of privacy to your personal data.
For instance, running a business in Liechtenstein will give you access to electronic banking and well-established financial services – after all, these are the country’s best sectors. With these thoughts in mind, you are less likely to see any privacy breaches or leaks in the news.
Despite not being part of the EU, Liechtenstein is similar to Switzerland and will reduce the tax burden on shareholders. It has managed to establish a plethora of double taxation treaties with different countries from all over the world.
In terms of procedures and requirements, they are minimal. You will need one shareholder and one director only. Forget about difficult minimal requirements. Besides, you can appoint the same person, so you practically need one individual to get everything done – yourself.
The nationality of the shareholder or director is irrelevant, as Liechtenstein has no restrictions there. There is, however, a small difference. Shareholders can live anywhere and have no residency requirements. On the other hand, at least one director should be resident in the country.
It is worth noting that other companies can be set as directors too.
The taxation system in Liechtenstein remains the main reason wherefore so many foreign entrepreneurs and investors choose this country. The maximum income rate you may end up paying is 20%, but there are lots of discounts and exemptions.Then, the corporate tax is set at 12.5%, but then again, there are many other exemptions. However, even if you do not qualify for discounts and exemptions, the tax rate is still among the lowest in the world, so it is definitely worth some attention.
Furthermore, the Liechtenstein company formation procedure is impressive with its simplicity and efficiency. There is not much to do – just provide all the documents to the Public Registry and bring evidence regarding the minimum share capital – €30,000.
To get the job done, it only takes a few working days.
Incorporating in Liechtenstein also provides access to massive markets. Liechtenstein is part of the European Economic Area, which includes the EU and countries like Norway and Iceland. It is also part of the EU’s single market.
The size of this micro nation should not put you off because it is a highly industrialized country. All sorts of companies are established in Liechtenstein – the industrial sector employs around 40% of the total workforce in this country. The manufacturing sector is following up closely.
As if all these were not enough, you have economical and political stability and continuity, a robust money-making climate, access to more markets, liberal economic policy, a top-notch credit rating and modern infrastructure. The Swiss franc is the official currency in Liechtenstein.
Challenges of Incorporating in Liechtenstein
Liechtenstein sounds like a dream come true for many, but it is not perfect. Sure, it could be the ideal environment for some investors, but it may not work very well for others. Here are some of the challenges you may face.For instance, the startup capital is quite high. Having €30,000 is fairly simple if you plan to start a large company in this country. But if you are after a small business to grow from scratch, you may not have that much capital.
Interested in using Liechtenstein for your offshore company? Not a great idea. If your company is not registered in the country, you will not benefit from double taxation agreements with other countries. This rule only applies to local companies.
The anstalt is the main offshore company type in Liechtenstein. If you are using it for small assets or non-trading applications, costs will most likely outweigh the benefits. Practically, this is not a good idea – instead, incorporate locally.
Even the costs to establish a local company are quite high. Then, it is worth noting that all companies operating in Liechtenstein will need to pay a profit tax. This is why the country is mostly seen as a playground for the rich.
Every single company in Liechtenstein must be audited. On the same note, financial reports are mandatory by law. At least one director must be resident in Liechtenstein, and residency is quite difficult to obtain.
Finally, if you are after anonymity, you should know that Liechtenstein has adopted the CRS.
Types of Companies you Can Register in Liechtenstein
There are more types of companies you can choose from when interested in Liechtenstein company formation, and just like you have probably guessed already, each of them comes with various specifications, pros, and cons.The private limited liability company is one of the most popular structures in the country. Just like in other countries, the type of the company is mentioned at the end of the name. In this case, your company will have GmbH at the end.
On the same note, you can also register a public company. The public company has more requirements in terms of capital. It will need AG at the end of the name, and these two letters could add to your overall reputation.
The anstalt is referred to as an enterprise. This is also the name given to offshore companies. Some would describe it as a trust – similar in structure. Moreover, you can also register a trust that will manage a different company.
Finally, you can opt for a stiftung, which is basically a fund for charitable reasons. It offers more privacy.
Now, Liechtenstein company formation can go further than that. There are more types of companies out there, but these are the most popular ones among both locals and foreigners. How about the regulations then?
You can register a company in the name of someone else – therefore, many professionals rely on Liechtenstein company formation services, rather than do everything themselves. The company will be in your hands, even if someone else registers it on your behalf.
The main consideration in the process – as well as the main obstacle – is having a director with residency status in Liechtenstein. Also, unlike other countries, Liechtenstein does not require a secretary for your company.
Becoming Familiar With Company Taxes in Liechtenstein
No matter what business activity you do or what industry you are part of, there is a minimum tax you need to pay on a yearly basis. This tax is set at 1,800 Swiss francs and must be paid annually. As for the profit tax rate, it is normally set at 12.5%.Not all company profits will be taxed in Liechtenstein though, so you might keep more of your money if you play your cards right. For instance, profits made by nonresident company subsidiaries in other countries are not taxed in Liechtenstein.
Then, if you rent properties in other countries, you will not have to pay tax on the rental income in Liechtenstein – you may want to double-check other countries' laws though. The same rule applies if you sell property abroad.
Dividends coming from both offshore and local companies after 2011 will not be taxed in Liechtenstein. The same rule applies to all profits obtained from selling shares or corporate rights from your company in the country. There is no tax on these profits.
Steps for Liechtenstein Company Formation
Although you can choose a Liechtenstein company formation service to do everything for you, the process is simple and straightforward, so it could actually save you money. Here are the steps you need to go through.Decide on the company type
There are a few different types of companies in Liechtenstein, and each of them has its own specifications. You will need to research them and figure out which one is more suitable for your business needs and preferences. Should you hire a professional service, you will get all the guidance you need.
Choose the company name
There are no specific requirements when it comes to the language. The name could mean something in a local or different language, but it could also be a unique word. What truly matters is to find a unique name – something that is not already registered in Liechtenstein.At the same time, the name is not supposed to have geographical names at all – not even local names. There must be no references to investments, insurance services, or banking. Even slight references could get your application rejected.
Finally, based on the type of company you choose, you will have an acronym at the end of the name.
Get all the required documents
The application is simple and fast, but just like everywhere else, there are plenty of documents you need to bring in. Luckily, most of them are easy to obtain and do not require too much work. For example, how about identification?Your passport is not enough – instead, you must make notarized and apostilled copies. If you have two passports, make copies of both of them and get them legalized. When it comes to proof of address, it can be a bank statement, but a recent utility bill is better.
No matter what country you come from, you will need to get police clearance from a local police station. Each country has different procedures – most of them imply filling a form and waiting for the papers that prove you are clean.
Prospective company bylaws will also be required, as well as a bank statement that proves you have deposited the registered capital. Obviously, this bank statement must be from a local bank, so you need to open a local bank account too.
Other than that, you will need to complete a form regarding the Liechtenstein company formation, but you also have to include signature samples of each company officer. Apart from the bank account, which takes more time, everything else is easy to collect.
Deposit the capital
You will obviously have to make the capital deposit before you apply to register the company, meaning you will need a bank account. Theoretically, you should get a bank account in Liechtenstein, yet, other countries may also be accepted.There are no down payments – everything must be paid in full, and prices depend on the company type you choose. Should you go for the classic AG, you will need 50,000 Swiss francs. If you are after a GmbH, stiftung or anstalt, you will need 30,000 Swiss francs.
While everything is advertised in Swiss francs, the truth is you can use other currencies too – similar in value. You can use francs, euros, or American dollars. There will be no conversions – figures will stay the same.
It is important to know that apart from money, you can use non-material assets too, such as real estate or even intellectual property. The registered capital can be used in more ways once the company is registered – up to you.
Form a public company, and you can come up with all kinds of shares.
Time Frames for Liechtenstein Company Formation
The process itself is not too complicated, but then, how long does Liechtenstein company formation take? Since Liechtenstein is a business-motivated jurisdiction, time frames are relatively low, assuming you have all the documents in place.The actual incorporation of the company will take a few business days. It can be done in a couple of days, but there is nothing to panic about if it takes three or four days. Whether you do it yourself or hire a Liechtenstein company formation service, time frames will not change.
Just because your company is incorporated, it does not mean that you will get the documents in person straight away. Instead, it takes around two weeks to receive the original company documents. Meanwhile, you can start trading or get ready for it.
Other than that, opening an offshore bank account will take up to three weeks.
Liechtenstein Company Formation Services
To save money, lots of people interested in small or middle-sized companies will do everything themselves. There are, however, a lot of services to help out there. Since the process is so simple and straightforward, costs will not be too high. Here are some of them.Company Formation Liechtenstein
Based in Switzerland, Company Formation Liechtenstein offers a comprehensive service, especially since laws in Switzerland are similar to those in Liechtenstein. The service is available to both locals and foreigners interested in establishing a local business.The firm also has an office in Liechtenstein. No matter what type of company you choose, you will get the required assistance, as well as other associated financial services. Other services include shelf companies, bookkeeping, audits, corporate administration, tax planning, and work permits, among others.
Healy Consultants
Established in 2003, Healy Consultants can help customers with Liechtenstein company formation, business banking solutions, business licensing, visa options, and even workspace for your needs. The company helps with all sorts of companies, including GmbH and AG types.Even if you are not sure what you need, you can simply get in touch with Healy Consultants, and you will get a proposal within hours only. The experts can also make certain recommendations if you are not sure about the company type for your business priorities – all in all, this is a classic one-stop shop.
Sigtax
Sigtax has gathered together a bunch of lawyers and partners who are actually specialized in business matters – from Liechtenstein company formation and business accounting to bank accounts, planning, and tax optimization. The process is extremely fast – you just need to bring in the required documents.Company formation is just one of the main services. Even after you register your company, you can still seek help on a plethora of other legal matters. Sigtax aims to reduce the legal and bureaucratic burden by making this process extremely simple and straightforward – you can also seek advice on business types.
Liechtenstein Business
All people of all nationalities can establish companies in Liechtenstein, and Liechtenstein Business aims to simplify this already simple process. The experts will explain each step of the process and guide you accordingly – you only need to bring the documents and make a few decisions, such as the name.Furthermore, you will learn about different types of companies and how they can match your business priorities. The company offers a checklist for each type of company, so you can start gathering papers before even getting in touch. Being around for ages, its reputation is extremely high.
Prifinance
Prifinance goes straight to the point – once on the website, you can enter your phone number, and someone will ring you in less than a minute. The company will reserve names, submit paperwork and do everything you are supposed to do on your behalf, but it also goes the extra mile.For instance, you can get an office, a nominee director, benefit from accounting services, and so on. There are more packages you can choose from, and each of them comes with certain benefits. It is worth noting that Prifinance is specialized in company formation worldwide and not just in Liechtenstein.
Conclusion
As a short final conclusion, Liechtenstein company formation comes with plenty of advantages in the long run, whether you are after low taxes, a qualified workforce, or a civilized and advanced jurisdiction. Once a playground for millionaires only, Liechtenstein is more accessible than ever these days.The micro nation is similar to Switzerland from many points of view, and while it does offer many benefits, it is not always suitable for everyone. At the end of the day, you do need some decent capital in order to start a business there. But once you are in, everything becomes simple.
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