Business without taxes in Switzerland and the Liechtenstein

The Principality of Liechtenstein is 160 sqm (62 sq miles), with a population of 3232,000 making it one of the smallest countries in the world. It is situated between Austria and Switzerland in the very heart of Europe. Since its foundation in 1719, Liechtenstein has always been ruled by princes. The Constitution of 1921, which is still valid, determines that the principality of Liechtenstein is a Constitutional Hereditary Monarchy based upon a Democratic parliamentary basis. In the 1923, the Swiss Franc became the official curency, but it was not until 1980, that a currency agreement with Switzerland was signed. The member countries of the EC have granted Liechtenstein in the contract of 1995 concession of  sovereignty among other independence in fiscal matters, total banking secrecy and exemption from  double taxation agreements. Mempership of the European Community is currently not viable, although Liechtenstein is a member of other international organizations such as ONU,  EFTA, EEA, EEC and WTO.

Unlike Switzerland, Liechtenstein is a member of the EEA (European Econimic Area). Elements which remain intact and guaranteed are fiscal severeignity and banking and insurance secrecy.

In many high-tax countries, double taxation agreements have been introduced to control taxes. The fact that Liechtenstein does not have such double taxation agreements (except for one with Austria controlling the relation to employees living in Austria but working  in Liechtenstein) and that it does not impose withhold tax or tax on interest, makes it an interesting place for investments not only in Swiss Francs but also in other currencies.

Liechtenstein has an excellent reputation for banking. Solidity in terms of customers services, final results, and banking secrecy is internationally unquestioned.

From 1 st January 1999, it is possible to convert existing bank account balances of any currency into EURO and to invest assest in EURO.

Unlike numerous other tax havens, your assets can be invested directly in Liechtenstein, without taxation on interest.

In many countries, tax offences lead to extradition. Not so in Liechtenstein, where there are no agreements regarding fiscal infringements.

In Liechtenstein, the post offices are closely linked with the Swiss service, mail within Europe is usually delivered within 2 to 3 days, tele-communication systems and equipment are of high quality.

Liechtenstein is also easy to reach: 250 kms from Milan (Italy), and Munich (Germany), and 100 kms from Zurich (Switzerland).

All in all, Liechtenstein offers an excellent business setting,because of political and social stability, liberal tax laws, the customs treaty with Switzerland and Austria and the currency agreement with Switzerland. It offers a most attractive, wide range of services not only to business persons, companies and negotiators, but also to private investors.

The bank secrecy of the Liechtenstein

The discretion of the bank supply and the privacy by the finance deals, previewed from the laws of the Liechtenstein, in combination with the presence in the country of the Offshore-government reform, offer of the optimal opportunities for the money investor who needs a maximum discretion.

A curious case: the famous multibillionair Aristotile Onassis more held in one foundation of the Lichtenstein of the half of his own patrimony.

Constitution of the Offshore society in the Liechtenstein

The current directives which regulate the entrepreneur's work in the Liechtenstein (the law about right persons and natural persons and about the societies), are since years'20 in force. Even if it does not come cited  "the offshore" term, comes however fixed an equal share to zero of the yield achieved from the society beyond the territorial borders.

The following types of society are previewed: "institution", the corporation (Ltd.) and the foundations.
The fewest company capital for a corporation is 50'000.-- CHF, for the societies of all the other types 30'000.-- CHF.

All the types of society only pay in pratical an overall year tax of 1'000.-- CHF.

Bankes, Insurances and Investment Funds

New: SINGLE LICENCE for Banks, Insurances and Investment Funds.
Liechtenstein's membership of the European Econimic Area means that its laws are in line with the European Union. The Principality's banks, insurances and investments companies therefore have easier access to the EC, and vice versa. The gateway to the single European market.
Liechtenstein: political and economic stability, easy to reach, access to all international financial centres, optimum infrastructure, flexible company law, low taxes, efficient public administration, financial centre, confidentiality and business, bussiness secrecy guaranteed.
A country rating from Moody's and Standard Poor's.

The same applies also to the Liechtenstein insurance companies (see "single license" as like the banks) thereby one can operate in each European country with a simple message in the respective state. For example: Le Generali have already formed an insurance company.

Investment funds of Liechtenstein and the relative legislation were established around the amendment in other right to compensate, as for example in Luxembourg, so to guarantee the European customer the diskretion,  the economic benefits with the absolute bank and professional secrecy. For other information we are glad to help you.

Social shapes/Corporate namesorme
 

Limited Company (S.p.A.)

Limited Companies are internationally recognised and accepted. however, the formation of a Limited Company in Liechtenstein is very strict and offers only limited business opportunities for modification of Articles of Association. Mostly, they conduct business in the sale and purchase of goods, services, movable proprieties, and real estate. Limited Companies can also be used in connection with asset investments and management or to hold rights of any kind.

The minimum capital to start up a campany of this kind is CHF 50'000.--. it must be fully paid in at the start. The start-up capital can be disposed of shortly after the registration in the Public Trade Register.

The Board of Directors must consist of at least one member who is a permanently resident in liechtenstein and hold an official licence to conduct business. The company owner does not necessarily have to be a Liechtenstein citizen or a permanent resident.

The maintenance of business accounts is compulsory, as is the official annual inspection of the business accounts by a qualified auditing company.

A proper Balance Sheet and Profit and Loss Accounts are compulsory and must be submitted to the Liechtenstein Tax Authorieties.

Shares can either be in the bearer's name (Bearer Share) or be a Registered Share. If shares are issued, bearer shares should be given preference to ensure full anonymity. Bearer Shares can be used as colateral. Should that be the case, the possession of shares must be transferred to the lender. There are no formalities when selling shares.

There are no regulations as to the number of shareholder. However, if there is a large number of shareholders, the setting up of an Establishment is not recommended.

The names of the founder/s and those of the shareholders are not shown in the Public Trade Register, which again guarantees full anonymity.

In case of closure, the Limited company has limited liability, i.e. it is only responsible for liabilities to the value of the company's assets.

The Foundation (reg. o dep.)

Foundation are usually set up to forever donate property or cash assets.

Foundation are also formed for the purpose of administration and preservation of (family) assets on account of legal security. (Endowments are often used to finance children's education or to support the founder and/or his relatives or to keep real estate assets for future generations). The founder can reserve the right to administer the Foundation's assets, not only in their time but also after their death. Foundations are not limited by time and can exist after the death of the founder.

The purpose of a Foundation is usually written down in the Foundation's Deed. The contents of the Deed of Foundation are not know to third parties unless specified. Any specific regulations are written down in the so-called Foundation's By-Laws. The succession and possible beneficiaries are determined by the founder and/or members of the Board of Foundation taken down in the Foundation'sBY-Laws. By-Laws do not have to be submitted to authorities and can be changed or cancelled by the founder.

Foundations are unsuitable for trade or business purposes. If the Foundation pursues an interest in business trading, it needs to be registered in the Public Trade Register. Full anonymity is still guaranteed as only the existence of the Foundation must be confirmed.

Usually, a trustee or trust company in Liechtenstein represents the founder, which ensures total anonymity. Anonymity can still be granted in the event of litigation.

Management and representation of Foundations toward third parties lie with the Board of Foundation. Rights and duties are put down in a contract. There must be at least one person on the Board who is permanently resident and officially permitted to conduct business in Liechtenstein.

There is a lot of freedom in the structure of the Foundation.

The minimum start-up capital for a Foundation is 30'000.--CHF. It is possible to pay the start-up capital in the form of real estates and houses, however, cash settlements should be given preference.

Further asset contributions are tax-free.

It is possible to retract contributed assets. If requested, contributions can be returned to the founder. it is possible to protect the Foundation in the event of creditors' charges. The Foundation's assets are also safeguarded even if the Foundation has filed for bankruptcy, on the condition that this benefit is not misused. In case of closure, the Foundation's assets stand surety for all kinds of liabilities. Donations made to appointed beneficiaries can be conditional. Beneficiaries can be private as well as judicial persons, charities, and religious or cultural institutions and organisations. Also, founders can appoint themselves as the first and/r the only beneficiary. Further appointments of beneficiaries are entered in the By-Laws. To ensure the designated use of the assets, special regulations can be set up.

The Foundation's and the founder's private assets are handled separately.

The company register differentiates between registered and deposited deeds of foundation. The latter is merely deposited with the company register office without its contents being accessible to third parties. Mandatory registration depends on the objects of the foundation and how it intends to achieve these. The foundation has legal personality whether or not it is registered.

Registered Foundations are not subject to maintaining business accounts. It is, however, recommended to maintain such, as they are best referred to when checking on the Foundation's financial situation. Also, Registered Foundations do not have to have their business accounts checked by an independant auditor.

As stated above, there is no obligation to submit any kind of documents statind the Foundation's finacial situation. Nevertheless, it is compulsory to forward a declaration confirming the esistence of any kind of assets.

Briefly, the main advantage of a Foundation are:

- International recognition
- Un-impeachment of the Foundation
- Very low taxes in respect of the value of the assets.
- Maintenance of assets over a long period of time

The Establishment

Establishments are often preferred for their business flexibility: asseet management, real estate acquisitions and business trading.

There are hardly any binding regulations in law. If it is used for commercial business, it is a legal obligation to produce a Balance Sheet, and law requires an official auditor. If the Establishment is used to administer assets and/or hold shares or rights of any kind, no audits is necessary. An Establishment, with its parent company in Liechtenstein, conducting business abroad, may maintain their business accounts including their Balance Sheets in a foreign currency.

Generally: Establishment can be set up with only one person on the Board. Nevertheless, it is essential to appoint at least one representative who is permanently resident in Liechtenstein and holds an official license to conduct business in the Principality.

The founder holds the permanent Founder's Preference Rights, which are not pawnable can not be incriminated. The rights can be vested without restrictions, and therefore be transferred to a trustee or trust company.

The Articles of Association of the Establishment are available to third parties as they have to be registered in the Public Trade Register. However, anonymity can be granted by listing possible beneficiaries in the company's By-Laws which do not have to be submitted. Obviously, By.Laws are as binding as the Articles of Association.

The minimum start-up capital is 30'000.-- CHF.

In the event of closure, any liabilities are solely covered by the Establishment's assets.
Establishments do not pay tax on profits.

In comparison with Limited Companies, Establishments have a more flexible structure.

Furthermore, the minimum start-up capital is lower, and tax is payable on dividends unlike shares in a Limited Company.

Trust reg.

This kind of company form is usually established when assets of any kind in the Anglo-Saxon area are to be managed.

The minimum start-up capital is 30'000.-- CHF. Any liabilities in the event of the company closing down are only covered by the Trust's assets.

For reasons of taxation, it is strongly recommended to have the Trust's Head Office where the main business transactions are conducted for reasons of taxation.

In Europe, the Anglo-Saxon Trust Scheme is only recognised by Liechtenstein.

If required, Trusts can be founded with a stipulation declaring that the Trust is to be founded,subject to another country's law.

There are hardly any limitations in terms of the organisational structure. However, Trusts must provide a Liechtenstein representative and at least one member of the Board must be a permanent resident of Liechtenstein and hold a license to conduct business in the Principality.

Trusts are subject to maintaining business accounts. Donations can be limited in time and/or by special conditions.

Trusts have to be registered in the Public Trade Register, which is accessible to third parties. However, beneficiaries and settlers are anonymous as they are listed in the Trust's Deed, which does not have to be submitted to the Public Trade Register. The kind of donation, time and extent of the donations are usually taken down in the Trust Deed, and therefore, full anonymity is guaranteed.

The main reason to set up a Trust is that they can be set up as Trust reg. (Treuunternehmen reg.), which are most suitable within Common-Law-Countries.

Trustship

A trusteeship is at issue when a third party (settler) leaves assets of any kond (movable or imovable assets or rights of any kind) to a Trustee in his own name and as an independent legal body, for the benefit of one or several beneficiaries.

Trustees in the principality have to comply to very high standards. But unlike their Swiss collegues, they are allowed to carry out settlements and transactions for their custumers in their own name. Thus, the custumer stays totally anonymous.

The attitude by us is, to propose a foundation, in place of a trust, for simple reason, that the capacity of a foundation is showable, at the trust however is necessary an unlimited confidence to the trustee. It is also true, that the trustee must indicate the property, like it in the reality is, a trustee property administers.

Trusteeships have always played an important part in common-law countries. It makes movments of quantities of high value assets possible while avoiding inheritance tax, and they still meet all the conditions to fully ensure the integrity of the assets to the benefit of future generations.
Trustees in Liechtenstein are bound to Trade Secrecy, and Liechtenstein is the only country on the European continent to recognise the Anglo-Saxon trusteeship (ex Common Law.

It is relatively easy to start a company in Liechtenstein (mainly foreign based companies). The company founder, owner and/or shareholders (only for trustee) have to be known, and they do not have to be permanently resident in Liechtenstein. However, a member of the Board must be permanently resident and hold a license to conduct business in Liechtenstein.

Also, the company needs to be represented in Liechtenstein, and, irrespective of turnover and profit, pay an annual fee of 1'000.-- CHF for tax.

Shareholders' Meetings can be held and decisions be made outside Liechtenstein.

Prices of the recording and the management of the OFFSHORE SOCIETIES

Following you see the prices of the establishment offshore society in Liechtenstein which is able the MIRALUX FIDUCIARIA to move in the act and can recommend their customer. In the prices included is following: the constitution of the documents, as prescribed certified, the certificate of recording, the honorarium of the administrator of the society for the society for the duration of the first year and many other useful services.

Prices for Offshore - Panama/ Delaware/ Florida/ New Jersey/ New York

Case Studies

Example 1

A company with a production plant based  in Austria, produces computers and delivers them exclusively to the holding-company in Liechtenstein. The FL-company, which has taken over all the distribution, purchases the computers and delivers them to customers worldwide. As there is no tax on profits in Liechtenstein, the total profit is kept by the holding-company.
The affiliate now grants a loan to the parent indipendent company for expansion purposes. The  interest on the loan reduces the taxable profit of the parent company.

Illustration:

Example 2

A company in the UK, previously set up by a holding company in liechtenstein (low tax country), is the sole distributor of goods produced by the company's production plant in Austria.

The company in the UK transfers all profits to the Holding company in Liechtenstein, except for a 5% commission.

The holding company, which possibly also holds shares in the production plant in Austria, can grant loans to the company in Austria. As seen in the above example, the company in Austria can now reduce their profits by paying interest on these loans and therefore also reduce their tax burden.

Additionally, as the holding company and the Board of Directors is located in Liechtenstein which is a non-EC member, the exchange of information which is usually given within European Community member countries will not be automathically. Therefore, shareholders will keep their anonymity.

Holding Company located in Liechtenstein.

Holding Shares of companies in the UK and Austria.

Other examples of application