Taxes in Liechtenstein
The tax law is simple, transparent, attractive and adapted to the economic and legal framework conditions in Switzerland and abroad.
In the case of private individuals, assets and earnings from self-employment or employment are subject to tax. A progressive tax rate is applied. The compatibility of the Liechtenstein tax system with international and European tax systems is particularly important for companies. A fundamental principle of Liechtenstein tax law is the neutrality of decisions (i.e. no tax distortions in investment, financing, legal and organizational forms and profit appropriation decisions).
All persons gainfully employed in Liechtenstein who are employed as salaried employees are subject to wage tax or withholding tax on salaried earnings and other income. Companies are generally obliged to deduct wage tax from their employees' wages and pay it to the tax authorities. The amount of wage tax deducted is determined by the tax authorities. The marginal tax rate is between 3% (for income above the basic tax-free allowance) and a maximum of 24%. In addition, taxpayers in Liechtenstein complete an annual tax return for the final settlement of taxes. However, this is kept quite simple and can be completed relatively quickly.
The tax is levied on income from employment, substitute income and attendance fees.
In some cases, there is a limited tax liability for employees domiciled abroad. They are also subject to income tax (withholding tax) on earnings from employment, substitute income, attendance fees, pension/lump-sum benefits from the 1st and 2nd pillars and benefits from the closure of a vested benefits account or vested benefits policy.
The regulation varies depending on where you live:
- Employees resident in Switzerland do not pay taxes in Liechtenstein. These employees pay tax on their entire income at their place of residence in Switzerland.
- A flat-rate withholding tax of 4% is deducted from the salary of employees resident in Austria. This amount is credited against income tax in Austria. The supplementary sheet for cross-border commuters must be enclosed with the tax return.
- Employees resident in Germany pay taxes in both countries. In Liechtenstein, a withholding tax is levied depending on the amount of earnings. This is offset against the income tax payable in Germany.
Employees of the public administration or other public institutions domiciled abroad are an exception to these regulations. For them, their income, but not their assets, is taxed in Liechtenstein. For this reason, a complete tax return must be completed and submitted to the tax office in Liechtenstein. Depending on the country of residence, a distinction is made between employees of:
- Public-law institutions with sovereign powers
- Public-law institutions without sovereign powers
If the tax liability of employees of public-law institutions with sovereign powers ends with the payment of tax in Liechtenstein, the taxes paid in Liechtenstein by employees of public-law institutions without sovereign powers are only credited against the taxes owed in the country of residence.
Natural persons resident in Liechtenstein are subject to wealth tax and income tax. A state tax is levied on the one hand and a municipal tax depending on the respective municipality of residence on the other. The state tax rate is progressive in eight stages with a top rate of 8%. The municipal tax is levied by means of a surcharge on the calculated state tax. This surcharge ranges between 150% and 250% of the state tax and is set annually by each municipality at its discretion within this framework.
For earnings from employment, income tax is deducted by the employer and transferred directly to the tax authorities. An exact statement is then made by means of an annual tax return.
Taxpayers who are subject to wealth and income tax or income tax are requested to submit a tax return by means of a public announcement and the delivery of a tax form. The non-delivery of a form does not release the taxpayer from the tax liability or from the obligation to file a tax return. Taxpayers who do not receive forms must request them from the competent tax authority.
The tax return can also be downloaded online. This offers numerous advantages:
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Automatic calculation: Totals are calculated automatically and entered in the correct place in the form. Transfers from auxiliary forms are also inserted automatically.
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Multiple entries: Input masks allow more entries than are provided for in the form. These are automatically output on additional sheets when printing. Only the total number of entries is shown on the form with a corresponding note.
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Integrated guidance: The guidance is available electronically. It can be called up for certain points of the tax return. The corresponding page of the guide can be called up by right-clicking on the individual figures.
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Integrated tax calculator: Tax calculations can be carried out using the integrated tax calculator. (Note: Tax calculation for natural persons: If the tax liability does not apply to the entire year, the corresponding deductions must be made on a pro rata basis. There may be differences in the tax invoice from the municipal tax office compared to the electronic tax calculation, as the calculation does not take into account any changes to municipal tax surcharges, municipal tax assessments and tax separations or the municipal tax office or tax administration has made changes to the tax factors).
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Client capability: Unlimited tax returns can be created and completed.
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Transfer of previous year's data
VAT is a consumption tax and is intended to burden domestic consumption.
Due to international treaty agreements between Liechtenstein and Switzerland, the territories of both countries form a common "domestic VAT territory". The term "domestic territory" in the VAT Act refers to the territory of both countries. Liechtenstein and Switzerland have largely identical VAT regulations.
