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Why Is Liechtenstein an Attractive Country for Investors?

Why Is Liechtenstein an Attractive Country for Investors?

Even if it is one of the smallest European states, Liechtenstein is one of the most attractive countries for foreign investorsCredit agencies have offered Liechtenstein good ratings for several years in a row now which has led to the Principality to have very good economic prospects. Foreign enterprisers also rely on the legislation favoring investments. A particularity about Liechtenstein is that it entered a customs union with Switzerland and also uses the Swiss franc as a national currency.

If you want to open a company in Liechtenstein and need information on the legislation for foreign investments, our company formation agents can provide it to you.

Most industries are open to foreign investors in Liechtenstein

When inquiring on why foreign investors would decide to come to Liechtenstein and not Switzerland or Austria, its neighboring countries, it must be stated that the Government has opened the doors to most of the industries to foreign enterprisers coming here. Liechtenstein is the second largest financial center in Europe right after Luxembourg and also has the second greatest income per person in the world.

What differentiates Liechtenstein from its European neighbors is that the country is mostly open to small businesses which are also encouraged by the central authorities. Many companies operating all over the world have started as small businesses in Liechtenstein.

The video below shows why foreign investors come to Liechtenstein:

Liechtenstein has an attractive taxation system

Another reason making Liechtenstein an attractive country for foreign investors is its taxation system.  With a maximum income tax rate of 20% and a significant number of tax and investments agreements, the small country offers many other benefits to foreign investors. The corporate tax in Liechtenstein is set at one of the smallest rates in Europe: 12.5%. Also, many of the enterprisers coming from abroad are impressed with how swift the company registration process goes in Liechtenstein because of the lack of redtape.

Liechtenstein is also part of the European Economic Area, just like Switzerland, and thus it benefits from special provisions in its relations with the European Union.

Foreign investments in Liechtenstein

Liechtenstein has one of the most stable economies in Europe, which is why rating agencies have offered triple A ratings for several years in a row now. The last AAA rating obtained by Liechtenstein was obtained in July 2017 from Standard and Poor’s.

These ratings coupled with the stable economy drive many foreign investments in Liechtenstein, making it an attractive jurisdiction for international companies which establish branch offices and subsidiaries here. Liechtenstein has also open most of its industries to foreign investments, no restrictions being imposed to those interested in opening companies here.

Liechtenstein relies on one of the strongest banking industries in Europe

Not only that, but Liechtenstein ranks among the best countries in the world when it comes to setting up insurance companies and investment funds. Even if it is not an EU member, Liechtenstein has signed numerous agreements with the EU states which enable the latter to set up businesses in the investment funds sector in Liechtenstein.

During the last few years, Liechtenstein amended the investment funds legislation so it now offers one of the most modern infrastructures for creating fintech companies, such as cryptocurrency and crowdfunding businesses.

Our Liechtenstein company formation consultants can offer information on the legislation related to the banking industry. We can also help you set up a business in this field.

Liechtenstein and cryptocurrencies

In the last 3 years, Liechtenstein has become one of the most important cryptocurrency centers in Europe and the number of investors in this field has increased spectacularly. Among the reasons for opening a cryptocurrency company in Liechtenstein we mention the following:

  1.     Liechtenstein banks get involved in cryptocurrency transactions and initial coin offerings;
  2.     Initial coin offerings or ICOs are some of the most prolific business ideas related to cryptocurrencies in Liechtenstein;
  3.     the government has created the legal framework for the creation and promotion of cryptocurrencies;
  4.     Liechtenstein is about to be one of the first countries in Europe to have a network of cryptocurrency ATMs;
  5.     the Principality is also one of the first countries to allow the opening of a bank account with cryptocurrencies like Bitcoin or Ethereum;
  6.     Liechtenstein has strong relations with other European countries even if it is not an EU member;
  7.     At the beginning of 2018, the government announced the creation of the Blockchain Act;
  8.     Liechtenstein was one of the first countries to acknowledge the creation of Alternative Investment Funds for assets in cryptocurrency;
  9.     digital tokens launched through ICOs benefit from a very advantageous taxation system.

What makes Liechtenstein an attractive country for investors?

Steady economies are known to be the best incentives for foreign investors and this is exactly what Liechtenstein offers. With simple company registration procedures, but with very strict regulations applied in terms of banking transactions, Liechtenstein is far from being a tax haven.

The government has recently started to invest more in industries like research and development and new technologies which can be used in various industries, and thus drive foreign investors’ attention away from the financial industry. Moreover, Liechtenstein is now becoming more appealing for young enterprisers from neighboring countries who set up e-commerce businesses, fintech or IT companies here.

Tax advantages for foreign investors in Liechtenstein

Foreign investors coming to Liechtenstein will be levied the same taxes as local ones. Among these, one of the lowest corporate taxes in Europe- 12.5%, very low withholding taxes and a value added tax of 8%. Also, starting with 2018, the VAT will be reduced to 7.7%.

Foreign companies with operations in Liechtenstein can also take advantage of the country’s double tax treaties which provide for further reduced tax rates or exemptions. For example, branch offices will not be levied any tax when remitting incomes arisen in Liechtenstein to their home countries.

Other incentives for foreign investors coming to Liechtenstein

Even if the workforce is not considered an incentive related to foreign investors, in the case of Liechtenstein it is one of the most important assets. This is because it is made of specialists in most cases, unqualified personnel being quite rare here.

In terms of Company Law, Liechtenstein provides for most of the business forms available in other European countries, such as limited liability companies and joint stock corporations. For small enterprisers, the sole proprietorship is available.

Even if Liechtenstein is not an EU member state, foreign investors should know that the country has signed several agreements with the Union through which certain directives are harmonized with the local legislation in order to offer easy access to companies registered in EU block.

Types of foreign investments in Liechtenstein

As a foreigner intending to start a business in Liechtenstein, you might be in the situation to make a direct investment in this country, which refers to physical purchasing of buildings, machines, or different types of equipment.

There is also another way to enter the Liechtenstein economy, through indirect investments which refers to buying stocks or shares in the Liechtenstein based companies. You can do this for example by opening an investment fund in Liechtenstein. This type of foreign investment is usually less steady than the direct one, because stocks are volatile entities and they can be resold in very short time. 

For complete information on what makes Liechtenstein an attractive country for investors, please feel free to contact us. Our company registration representatives in Liechtenstein can also assist you open a company here.