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International Business
Companies
LIECHTENSTEIN TAXES
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Tax Implications/Advantages.
The Liechtenstein tax authorities
allow certain concessions to individuals and companies whose income under
the regular tax law is over10,000 Swiss Francs ($6,600.) annually. Favorable
settlements for the tax payer generally are accepted in lump sum, primarily
accounting for its attraction as a seat for foreign business. The rate
generally ranges from 6% to 12%, with the actual tax levied equal to one-half
of the percentage which is the ratio of profits to taxable net worth.
Other Advantages:
a) Holding and domiciliary
companies are not subject to the profits tax in Liechtenstein unless they
participate in business enterprises in Liechtenstein. Only the part of
income derived from the participation in Liechtenstein business is taxed
at the relatively low rates of taxation.
Definitions: A holding
company is an enterprise organised in the Principality of Liechtenstein,
the primary or predominant purpose of which is the administration and holding
of assets, investments and interests in other enterprises. A domiciliary
or base company is one which merely has its domicile in Liechtenstein but
carries on all its activities abroad.
b) Holding and domiciliary
companies are treated alike as base companies if they are not engaged in
business in Liechtenstein. Both may obtain an office in Liechtenstein with
one or several employees without loosing their privileged tax status as
long as they do not engage in commerce or industry in Liechtenstein.
c) The only annual tax to
which holding or domiciliary companies are subject is the annual capital
tax at the reduced rate of 0.05%. If capital exceeds 2,000,000 Swiss francs
($1,557,000.), then the capital tax is reduced further to 0.025%. The minimum
capital tax is 1,000 Swiss francs ($778.50) annually for holding and domiciliary
companies.
d) The withholding tax on
dividends and similar profit distributions made by Liechtenstein companies
is only 4%. The 4% is withheld when a resident Liechtenstein company pays
the dividend or interest to another Liechtenstein company.
e) Domiciliary Companies,
International Holding Companies, other corporations and special types of
firms, with a seat in Liechtenstein, but with business activities primarily
outside the Principality, have the option of concluding a contract with
the authorities guaranteeing them that the tax rate paid at the present
will continue in effect for 30 years.
f) Royalties are not taxable
while interest is subject to 4% tax. There is an 8.4% turnover tax on goods
transferred for sale and on imported goods. The rate is 5.6% for other
goods. The turnover tax is paid by the consumer.
g) Estates are taxed at low
rates from 1 to 5%.
(Tax Reform Bill 19977) The
low 0.1% tax rate would continue for offshore insurance companies and for
holding and domiciliary companies which are totally foreign owned and have
no economic ties to Liechtenstein.
INCORPORATION
OF AN IBC
FORMATION
No permit is required to
establish a company in Liechtenstein, except for Banks, Finance and Insurance
companies, Investment Funds, Trust companies and Auditing Firms, they all
require a special license.
There are two types of formation
of a company:
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Successive Formation
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The founders appeal to third
parties for the procurement of the nominal capital or a part thereof.
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Determination and signing of
the articles by the founders.
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Minimum contents of the articles.
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Issuance of a prospectus for
the public subscription to the shares forming the nominal capital.
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Resolution in general meeting
of the subscribers concerning the approval of the subscriptions and the
payments effected also concerning the appointment of the necessary governing
bodies of the company.
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Entry in the Public Register
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Simultaneous Formation
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The proceeding described above
work simultaneously. The founders personally raise the capital. The prospectus
and the founders’ report as well as the general meeting are omitted.
All corporate bodies to be formed
must possess Articles of Association in writing. These must contain all
the necessary elements for setting up the corporate body.
Content of Articles:
The Articles must expressly
endow the enterprise with a legal form as:
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An association
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Company Limited by shares
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Limited partnership with share
capital
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Company Limited by quota shares
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Private company limited
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Registered cooperative society
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Establishment or
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Foundation
COMPANY NAME
Free choice of the company’s
name.
It is possible to select
a fancy name or designation of object or a name which indicates the activity
or the name of the person. The firm name must indicate the type of entity
and cannot conflict with a similar name or result in any confusion. A title
containing the name of an individual must have written consent from him
and he must be a member of the company. A company may not use a national,
regional or territorial name but exemptions are granted to this rule.
It is mandatory that the
subjoinder "Company Limited" be written out either in front or behind the
company’s name.
No national or international
indication in the company’s name. Exclusivity of the company entered in
the Public Register.
CAPITAL AND MEMBERS
What is the minimum authorised
capital for an IBC?
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The minimum authorised capital
for an IBC is Sw.Frs.50,000.= (USD$46,620.00) . The legally prescribed
minimum capital must be fully paid up. At least 20% of the share capital,
but at least Sw.Frs.50 000. must be paid up. The shares capital divided
into portions, referred to as shares. The nominal value of the shares may
be determined freely.
What type of shares can be
issued by an IBC?
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Shares issued are securities,
registered, preference, voting, no par value and bearer. Issuance below
nominal value is possible only in case of registered shares.
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Additionally, any issued shares
can have the following characteristics:
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More or less voting privileges
per share;
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Vote only on certain matters
or only upon certain events;
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Vote only when shareholders’
meeting is held by people
(a) Who meet specific requirements
or
(b) Who have authorised participation
in certain assets.
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It is further possible for an
IBC to:
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Issue options, warrants, rights,
or similar instruments.
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Issue convertible securities.
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Is confidentiality of the
Shareholders available in the Liechtenstein?
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Information regarding shareholders
is confidential. Identities are not recorded publicly, nor do Government
or tax authorities have access to such information. The shareholder register
need not be registered with the Registrar of the Liechtenstein.
DIRECTORS AND
OFFICERS
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How are the Directors and
Officers appointed?
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One board member must be a Liechtenstein
attorney, law agent, licensed trustee, or auditor but the remaining board
members may be citizens of any other country and may manage the corporation
from anywhere in the world. The majority of the ex executive body may consist
of non-Liechtenstein residents, if desired.
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What information can be revealed
about the Directors and Officers?
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None. The information regarding
the directors and officers shall not be revealed, since this information
is confidential and is not a matter of public knowledge. It doesn’t need
to be filed in the Public Registry. However, it is required that the names
and general information of Officers and Directors Book be kept in the Registered
Office of the Company.
RE-DOMICILIATION
DEFINITION
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What is re-domiciliation?
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Re-domiciliation is where a
Company changes its jurisdiction of domicile. This involves transferring
a corporation without dissolving nor liquidating it, to another jurisdiction,
being protected under its laws, without extinguishing the obligations and
rights obtained and subject to the old jurisdiction. It operates bilaterally
between both jurisdictions, in that the jurisdiction being left cannot
have laws which automatically terminate the existence of the corporation
upon a change of domicile, and the new domicile must have legislation which
allows a corporation to continue from another jurisdiction. Generally,
such legislation exists only in tax havens.
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How does re-domicile apply
in Liechtenstein?
With regard to international
law, a corporate body is domiciled in Liechtenstein if that is where its
administration is centered or where a substantial part of its activities
is carried on or if the Articles so determine and entry in the Public Register,
where required, has been effected.
A foreign legal entity may,
with the approval of the Court, transfer its registered office to Liechtenstein
by an entry in the Public Register and appointing a Legal Representative,
without dissolution abroad and re-incorporation in Liechtenstein or transferring
of its business activities or administration being required. Such approval
may be given only if the corporate body can prove that its Articles comply
with Liechtenstein law or have been adapted to Liechtenstein law and that
the minimum capital pr minimum assets required under Liechtenstein law
are available at the time the registered office is transferred.
A legal entity in Liechtenstein
may transfer its registered office abroad only with the consent of the
Government.
The legal capacity and power
to act are governed by the laws of the place of the registered office.
These laws, in particular, also govern the formation, alteration and dissolution
of corporate bodies, the organisation, rights and duties of the governing
bodies, the legal status of a member, and the acquisition and loss of membership.
LIECHTENSTEIN
Statutory Fees
& Services Charges for IBCs
|
Item
|
Authorised Capital
|
Government Fee
|
Fees
|
| Incorporation |
Up to $
Up to $
Over $
|
$ |
Establishments
costs $3,400.00 to $4,000.00.
900 francs for capital up
to 100,000 swiis francs. |
| Continuation |
Up to $ (foreign
cos.)
Up to $ (Co.
Acts)
Over $ (foreign
cos.)
|
$
$
$ |
150
francs additional 100,000 swiis francs |
| Annual
License Fee |
Up to $
Up to $
No capital
or par value
Over $
|
$
$
$
$ |
$3,500.00
to $3,700.00 annual costs. |
| Merger/Consolidation |
Over $
|
$ |
|
| Arrangements |
Over $
|
$ |
|
| Articles
of Merger or Cons. |
Registration
|
$ |
|
| Articles
of Memorandum |
Amendment
|
$ |
|
| Articles
of Dissolution |
Registration
|
$ |
|
| Resolution
of Rescinding Articles of Diss. |
Registration
|
$ |
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| Incorp./Merger/Consol./
Documents |
Copies of Extract
|
$ |
|
| Documents |
Inspection
|
$ |
|
| Company
Name |
Restoration
|
$
- $ |
|
| Each
Entry |
Inspection
|
$ |
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