Personal Income Tax

Individuals residing in Liechtenstein have unlimited tax liability with their global property and income to property and income tax. Individuals neither domiciled nor habitually resident in Liechtenstein are subject to limited tax liability on their domestic assets and domestic income.

The tax liability commences on the day on which the taxpayer:

• takes up residence in Liechtenstein or makes Liechtenstein their place of habitual abode (unlimited tax liability); or
• has assets (real estate and domestic permanent establishments) in Liechtenstein or generates earnings in Liechtenstein (limited tax liability).

Tax Rate

The national income tax is calculated based on the taxable income. The first CHF15,855 of a single person’s income are exempt from income taxation (basic allowance). The national income tax is progressive and ranges from 1% (on income from CHF15,856 to CHF21,140) to 8% (on a single person’s annual income from CHF211,401; Article 19, paragraph 1, letter a, SteG). In addition, a municipal surcharge is levied, determined annually as a percentage of the national tax; it may not fall below 150% and may not exceed 250% (Article 75, paragraph 3, SteG). A variety of expenditures are tax deductible.

Wealth Tax

In addition to income tax, Liechtenstein levies a wealth tax or property tax (Vermögenssteuer). A notional yield (Sollertrag) of 4% on the fair market value of the taxpayer’s total movable and immovable assets is treated as deemed income and taxed together with the taxpayer’s other income; the government reviews the adequacy of this rate every four years (Article 5, SteG). Securities with a quoted price held by a natural person have the considered value on the basis of the quoted price.

Inheritance Tax

Liechtenstein levies neither gift nor inheritance tax.

Trusts and Private Foundations

Private foundations are legal persons under Liechtenstein tax laws. Trusts with legal personality (Treuunternehmen) are also legal persons. Both are subject to corporate income tax like other companies and investment funds. In general, the corporate income tax for all legal entities domiciled in the Principality of Liechtenstein is 12.5% of taxable net income with a minimum tax of CHF1,800 per year. Trusts without legal personality are not subject to corporate income tax.

Private Asset Structure (PAS)

The status of a PAS can be granted to legal persons who, in the pursuit of their objective, do not perform any commercial activity (such as renting or lending), in particular if they exclusively acquire, hold, manage and sell bankable assets according to the Liechtenstein Assets Management Act and participations in legal persons, liquid funds and bank balances. The PAS may only hold participations in companies if it can be proved that the shareholders or beneficiaries do not exercise actual control over the management of these companies through direct or indirect influence. The articles of incorporation of a PAS must indicate that they are subject to the restrictions applying to a PAS under the Tax Act of Liechtenstein. Investors of a PAS can only be natural persons acting within the context of management of their private assets, an asset structure acting exclusively in the interests of the private assets of one or more natural person or an intermediary for one of these mentioned persons. A PAS only pays the annual minimum corporate income tax of CHF1,800.

Exemptions From Wealth Tax/Property Tax

Exempted from wealth tax are:

• the taxpayer’s household content and personal content;
• privately used motor vehicles with a value under CHF25,000 (single taxpayer)/CHF50,000 (jointly taxable spouses);
• equipment and tools required for the exercise of an agricultural or commercial gainful activity or another profession under the total value of CHF2,000;
• collections of artistic, historical or similar importance made accessible to public viewing, educational purposes or promoting tourism;
• assets in agricultural products such as hay, grain and fruit;
• real estate located abroad; and
• business premises located abroad.

Tax Exemption on Dividends/Switch-Over-Clause

In principle, dividends and profits deriving from shareholdings in domestic or foreign legal persons are exempt from income tax. However, shares in profits/dividends due to participations in or distributions of foreign legal entities are not exempt from income tax if the following cumulative conditions are fulfilled:

• the total income of the foreign legal entity paying the dividends/shares in profits (ie, distribution) is sustainable to more than 50% from passive income (exemption: the income is generated within the framework of an actual economic activity by the foreign legal entity making the distribution); and
• the net profit of the distributing foreign legal entity is directly or indirectly subject to low taxation.

A low rate of taxation is understood as either:

• deduction of corporate earnings tax at a rate that is less than half the rate of taxation in Liechtenstein (in case of holdings of less than 25%); or
• an effective deduction of corporate earnings tax of less than 50% of the corporate earnings tax charge in an equivalent situation in Liechtenstein (in case of holdings of more than 25%).

In principle, capital gains from the sale or liquidation and unrealised increases in value of holdings in domestic or foreign legal persons are tax-exempt. Consequentially, capital losses cannot be deducted. Such capital gains and unrealised capital gains are not exempt from income tax if they relate to participations in foreign legal entities whose profit shares would also not be exempt from income tax.

Liechtenstein does not levy capital gains tax. Capital gains are tax free.

Liechtenstein acknowledges income tax planning. One main principle is the decision neutrality of taxation, ie, taxation shall be neutral towards economic or business decisions. Specific tax planning provisions are the PAS (see 1.1 Tax Regimes) and lump-sum-taxation on expenditures.

Lump Sum Taxation

Liechtenstein offers an appealing flat tax based on expenditure for natural persons. This tax on expenditure is levied instead of income tax and wealth or property tax. Individuals considering this tax regime must meet the following requirements:

• foreign citizenship;
• taking up residence or habitual residence for the first time or after a period of ten years of absence;
• no engagement in any gainful activity in Liechtenstein;
• living off the gain of global personal property; and
• application approved by the tax authority.

The tax base is the overall and global expenditure from maintaining the individual’s living standard. The following expenses are typically taken into account:

• housing;
• wages for employees;
• further education; and
• leisure activities, including ownership or special expenses for holiday residences, yachts and airplanes, respectively.

The effective tax rate applied to the overall sum is 25%.

A further advantage of the tax on expenditure is that the tax can be fixed for several years in advance, therefore, an individual does not have to meet any other reporting obligations except considerable alterations on the expenditures themselves.

Liechtenstein does not levy an exit tax. Unlimited tax liability simply ends on the day a taxpayer relocates their residence or habitual abode abroad, and the ordinary income and wealth tax liability ceases from that date without any deemed disposal of assets or claw-back of pre-departure appreciation (Article 7 Abs 2 lit a, SteG). Individuals leaving Liechtenstein therefore do not need to plan around a domestic exit charge, although the tax consequences in the receiving jurisdiction must always be considered separately.

For individuals moving into Liechtenstein, unlimited tax liability begins on the day residence or habitual abode is taken up (Article 7 Abs 1 lit a, SteG). For wealth tax purposes, the fair market value of the taxpayer’s assets is determined as at the beginning of the tax liability, not by reference to historical acquisition cost (Article 12 Abs 1, SteG). This gives incoming residents a clean valuation basis for the wealth tax and, combined with the absence of a capital gains tax on private assets, means that pre-existing unrealised appreciation is not taxed on arrival and requires no formal step-up mechanism.

Pre-immigration planning in Liechtenstein therefore centres less on avoiding a domestic charge and more on timing and eligibility for the lump-sum taxation regime (Besteuerung nach dem Aufwand) described in 1.3 Income Tax Planning. Access to that regime requires, among other things, that the individual has not been resident in Liechtenstein for at least the preceding ten years, holds no Liechtenstein citizenship and pursues no gainful activity in the country (Article 30 Abs 1, SteG). Individuals who might benefit from this treatment should therefore plan the timing of any prior stays in Liechtenstein, and structure foreign shareholdings, trusts and foundations before relocating, so as to preserve eligibility and to align the reporting position of foreign structures with the disclosure expected under the application procedure (Article 30 Abs 2, SteG).

Because Liechtenstein neither taxes capital gains nor levies gift or inheritance tax (see 1.1 Tax Regimes and 2.6 Transfer of Assets: Vehicle and Planning Mechanisms), advisers most often focus pre-immigration work on the client’s country of origin, where an exit tax, a deemed disposal rule or a lengthy post-emigration tail of tax liability may apply. Realising gains, restructuring shareholdings or settling assets into a foundation or trust before relocating to Liechtenstein should always be tested against the departure rules of the client’s current jurisdiction, since Liechtenstein imposes no comparable barrier of its own.

Taxation of Real Estate of Non-Residents

Non-residents are subject to limited tax liability on their domestic assets, including real estate and domestic income.

Real Estate Gains Tax

Profits on the sale of real estate located in Liechtenstein are taxable under the real estate gains tax. The transfer of a property by forced sale or expropriation and the economic change of ownership of a property, the encumbrance of a property with easements and the transfer of participation rights in legal entities whose main purpose is the acquisition, ownership, management and sale of real estate are considered to be equivalent to a sale. The seller is liable for real estate gains tax.

Taxation basis

The proceeds exceeding the investment costs are deemed to be the gain on real estate. The purchase price including all other payments by the purchaser shall be deemed to be the proceeds of the sale. If a property is transferred by forced sale or expropriation, the proceeds of the auction or the compensation amount shall be deemed to be the proceeds of the sale. Losses incurred by the taxpayer on the property in previous years may be deducted from the gain on the property, provided such losses were not covered by insurance benefits. In the case of an exchange of immovable property, the difference between the market value of the property received (asset value and premium) and the investment costs of the property given up is deemed to be a gain on real estate.

Investment costs are deemed to be the official estimated tax value at the time of sale, increased by the purchase price, to the extent that it exceeds the tax value, and the value-enhancing expenses excluding the usual value maintenance costs.

Deferral of the real estate gains tax

Taxation with real estate gains tax is deferred by law or upon request in the event of:

• change of ownership by reason of death, advance inheritance or gift;
• consolidation of property and reallocation of building land or boundary adjustments carried out in accordance with public law;
• restructuring;
• changes of ownership between spouses; and
• change of ownership through the transfer of real estate to settle claims under matrimonial property law or maintenance law or claims resulting from the involvement of one spouse in the acquisition by the other.

Tax rate of real estate gains tax

The tax rate pursuant to personal income tax applies to taxable gains on real estate. If several parcels of the same property or properties that formed a property unit five years ago are sold within five years, the basic tax-free amount is only granted once to the same taxpayer. Instead of the municipal surcharge, a surcharge of 200% is levied on the amount calculated.

The Liechtenstein tax system is stable and reliable for private clients. The current tax law came into force on 1 January 2011. The general principles of the tax law remain unchanged. Most amendments are implemented in connection with European and global tax initiatives. The implementation of the switch-over-clause and the GloBE Act of 10 November 2023 on the global minimum tax regime for big multinational companies are also noteworthy.

The GloBE tax applies for first time for the tax years beginning on or after 1 January 2024. The Liechtenstein top-up tax within the meaning of the GloBE Model Rules applies to domestic constituent entities of a multinational enterprise group or a large domestic group whose ultimate parent entity has generated an annual revenue of EUR750 million or more in its consolidated financial statements in at least two of the four fiscal years immediately preceding the reviewed fiscal year. Joint ventures and constituent entities of joint ventures are also subject to the Liechtenstein top-up tax. If a lower threshold than the mentioned annual revenue applies in the tax jurisdiction of the ultimate parent entity of a multinational enterprise group, its domestic constituent entities are also subject to the Liechtenstein top-up tax. The minimum rate for the Liechtenstein top-up tax is 15%. Liechtenstein top-up tax shall be set to zero in the first five years of the initial phase of the international activity of the multinational enterprise group, provided that no top-up tax is applied abroad in relation to Liechtenstein constituent entities, and in the first five years from the first day of the fiscal year in which the large domestic group originally comes within the scope of the GloBE Act. Liechtenstein top-up tax shall be allocated to and collected from the Liechtenstein constituent entity. All domestic constituent entities shall be jointly and severally liable for the Liechtenstein top-up tax.

Liechtenstein has committed to OECD standards and endorses the global Common Reporting Standard (CRS) for the automatic exchange of information in tax matters (AEOI). Liechtenstein has been exchanging information with reportable AEOI-partner states since 2017. Annex 1 of the AEOI-Ordinance (AIA-Verordnung) contains the list of reportable partner states. The list comprises 125 states (as of 1 January 2026). The legal basis for the AEOI between Liechtenstein and the EU member states is the “Agreement between the European Union and the Principality of Liechtenstein on the automatic exchange of financial account information to improve international tax compliance”. The legal bases for the AEOI between Liechtenstein and non-EU countries are the multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (CRS MCAA).

Further, Liechtenstein complies with the US Foreign Account Tax Compliance Act (FATCA) provisions. Liechtenstein has also entered into a Model I intergovernmental agreement (IGA).

In May 2017, Liechtenstein implemented Action 13 of the BEPS Action Plan by activating the exchange of Country-by-Country Reports (“CbC Reports”) of the CbC Multilateral Competent Authority Agreement (MCAA) with 26 jurisdictions on a bilateral basis (the first exchanges took place in 2018 for the reporting period of 2017). Multinational enterprises (MNEs) with an annual consolidated group revenue of more than CHF900 million have to file CbC Reports. Since 1 January 2017, the Liechtenstein tax authorities have been required to exchange information on tax rulings spontaneously. Most recently, on 7 November 2025, the Liechtenstein parliament passed the Crypto-Asset Reporting Framework Act (“CARF-Gesetz”), together with amendments to the AIA Act, the FATCA Act, the AStA Act and the CbC Act, thereby implementing the OECD’s Crypto-Asset Reporting Framework (CARF) and the revised Common Reporting Standard (“CRS 2023+”). The legislation entered into force on 1 January 2026 and extends the automatic exchange of information regime to crypto-asset service providers with a nexus to Liechtenstein, who must identify crypto-asset users, determine their tax residence and report relevant transactions (purchases, sales and exchanges of crypto-assets) to the Liechtenstein Tax Administration. The first reportable period is 2026, with the first cross-border exchange of data taking place in 2027. This closes the transparency gap that previously existed for digital assets and is directly relevant to foundations, trusts and establishments holding crypto-assets, which face increased due diligence and documentation requirements as a result. Liechtenstein has not yet implemented any measures in accordance with Action 12 of the BEPS Action Plan (which requires taxpayers to disclose their aggressive tax planning arrangements); as a non-EU EEA/EFTA state, Liechtenstein is also not directly bound by the EU’s DAC6 mandatory disclosure regime.

Liechtenstein is a country with a long European history and culture. The main cultural factors are the monarchy with a high level of stability, the Roman Catholic Church as the state church and the natural heritage. Liechtenstein still has significant industry and family businesses spanning more than two generations. Consequently, succession planning in the family, the transfer of real estate (land or buildings) and co-operation of generations regarding transfer of wealth are important. Liechtenstein also has a long tradition in banking and insurance services.

In connection with succession planning, Liechtenstein banks, asset managers, investment companies as well as legal advisers are competent in advising ultra-high-net-worth clients, domestic and international, in succession planning.

Liechtenstein families are part of the international growth of businesses and families. Several important and wealthy families are providing business and moving their residency globally. Consequently, Liechtenstein tax and inheritance laws must cover such flexibility. As an EEA/EFTA state and not an EU member, Liechtenstein is not bound by, and has not adopted, the EU Succession Regulation (Regulation (EU) No 650/2012). Cross-border succession is instead governed by Liechtenstein private international law, in particular the rules on the applicable succession law (Article 29, IPRG). Under succession planning, the Liechtenstein private foundation is still an important legal form for succession planning of families and businesses.

Liechtenstein has forced heirship rules. A compulsory portion of the estate shall be transferred to close relatives. Following the succession law reform that entered into force on 1 August 2024 (LGBl 2024.259), only the descendants and the spouse or registered partner of the deceased are entitled to a compulsory portion (Section 763, ABGB). Ascendants (parents and grandparents) are no longer entitled to a compulsory portion, even where the deceased leaves no descendants. Siblings, uncles/aunts, nieces/nephews and the partner in a non-marital partnership are not entitled either. The compulsory portion uniformly amounts to half of the share that the entitled person would receive under intestate (legal) succession (Section 765, paragraph 1, ABGB). The compulsory portion of the spouse or registered partner doubles where that person has contributed substantially to building up the deceased’s assets and the increase in assets generated during the marriage or registered partnership constitutes the major part of the estate (Section 765, paragraph 2, ABGB).

In order to calculate the compulsory portion, the evaluation of the estate is necessary. Gifts from the deceased or other dispositions must be taken into account. This includes gifts to children upon marriage/cohabitation, gifts upon commencement of a profession, payment of debts of an adult child, advances from the compulsory portion or, with regard to spouses, the statutory advance legacy. The right to a compulsory portion generally arises upon the death of the testator.

The last Will, marriage contract or inheritance contract can be used to arrange the inheritance as the deceased wishes, taking into account the compulsory portions.

Marriage does not establish conjugal community of property (Section 1233, ABGB). As the stipulations with regard to separation of property are ius dispositivum, the spouses are free to organise their common fortune ad libitum. They can establish a comprehensive community of past and future property, as well as a community comprising certain goods in common use; they can even extend this agreement to a property regime of the community of accrued gains.

Transfer of property is permissible under Liechtenstein civil laws. Transfer of real estate is subject to real estate gains tax (for more information, see 1.5 Taxation of Real Estate Owned by Non-Residents and Non-Citizens).

Advance transfer of inheritance is subject to recalculation of legal portion or compulsory portion upon death of the transferor. At the request of a person entitled to a compulsory portion, gifts made by the deceased are added to and set off against the compulsory portion in accordance with Section 781 et seq, ABGB. The gifted asset is valued as at the time the gift was actually made, and that value is then adjusted to the date of death in line with the national consumer price index (Section 785, ABGB).

Liechtenstein levies neither gift nor inheritance tax. Assets can be transferred to the younger generation tax-free.

Digital assets are considered to be assets under the Liechtenstein Blockchain Act (TVTG). Such assets are treated like moveable assets. Digital securities are treated like securities.

Trust/Trust Company

On 1 April 2006, the Hague Trusts Convention entered into force in Liechtenstein. Trusts are recognised in Liechtenstein. A trust is not a legal entity and has no legal personality, but it rather is a contractual legal relationship. Contrary to the (simple) trust, Liechtenstein also recognises Trust Enterprises with legal personality.

A trust consists of the trust fund transferred by the settlor to a trustee. The trustee is obliged to administer or use the trust fund in their own name as an independent legal owner for the benefit of one or several beneficiaries. Trusts can be set up for charitable, social, cultural or similar purposes and as a trust settlement or a family trust for the benefit of one or more families.

Trusts (without legal personality) established under Liechtenstein law or having their effective place of management in Liechtenstein are liable to the minimum corporate income tax of CHF1,800 per year. Trust Enterprises (with legal personality) are subject to regular corporate income taxation at a rate of 12.5% and are therefore subject to tax assessment. The endowment/transfer of assets located abroad to a Liechtenstein trust by a natural person (settlor) is not subject to the endowment tax of 3.5% of the value of the contribution if the settlor is not subject to unlimited tax liability in Liechtenstein. Liechtenstein does not levy a withholding tax on distributions made by a Liechtenstein trust to beneficiaries abroad.

Liechtenstein trusts may be established for an indefinite period. Therefore, trusts are not per se affected by succession. The law of the state whose nationality the settlor has may provide their heirs with a compulsory share of their estate. If a settlor submits the transfer of assets to a trust under the laws of Liechtenstein, the settlor’s heirs may claim payment from the trust fund to the extent that the deceased settlor’s estate does not suffice to cover their compulsory portion (Article 29, paragraph 5, IPRG, in conjunction with the provisions on the supplementation of the compulsory portion in Section 781 et seq, ABGB). Where Liechtenstein law was chosen to govern the transfer of assets, gifts to persons not entitled to a compulsory portion that were made more than two years before the settlor’s death are in principle disregarded, so that no shortfall payment can be claimed from the Liechtenstein trust in respect of such transfers (Section 781 et seq, ABGB).

Foundation

Foundations are recognised in Liechtenstein and governed by Article 552, paragraph 1 and the following PGR.

Foundations have had a long tradition in Liechtenstein. The common type is the family foundation using the assets comprised therein for the benefit of members of one or more families, also often used as a holding of family business companies. Liechtenstein is a well-known jurisdiction for foundations with charitable purposes.

The foundation legal entity established by a founder. The founder specifies its purpose and endows it with assets. These assets become property of the foundation and are separated from the founder’s private assets. The corporate body of a foundation is the Foundation Council, which conducts the business, represents the foundation in its relations with third parties and is responsible for the fulfilment of the foundation’s purpose. The Foundation Council must consist of at least two members. The founder can designate additional corporate bodies to manage the assets, and to advise and assist the Foundation Council. The minimum nominal capital is CHF30,000, EUR30,000 or USD30,000. The formation of the foundation can be in cash or in kind. The capital is at the Foundation Council’s free disposal.

Foundations established in Liechtenstein are liable to at least the minimum corporate income tax of CHF1,800 per year. Foundations with their registered office or effective place of management in Liechtenstein are liable to corporate income tax at a rate of 12.5% on their total income. Charitable foundations can be tax-exempt.

The endowment/transfer of assets located abroad to a Liechtenstein foundation by a natural person (founder) is not subject to the endowment tax of 3.5% of the value of the contribution if the founder is not subject to unlimited tax liability in Liechtenstein. Liechtenstein does not levy a withholding tax on distributions made by a Liechtenstein foundation to beneficiaries abroad.

A foundation is a legally and economically independent special-purpose fund that is formed as a legal entity through the unilateral declaration of will of the founder. In general, assets of the founder endowed by them to the foundation are not subject to their succession. If the testator was entitled to derive benefits from the foundation only during their lifetime, their beneficial entitlement in the foundation ends with their death and does not form part of their estate.

Similar Entities

The Establishment is an original Liechtenstein type of legal entity. It can be used for different purposes due to its flexible character. There are two main types of establishment, ie, the establishment with founder’s rights and the establishment without founder’s rights (foundation-like). The establishment with founder’s rights is similar to the small limited liability company. The holder of the founder’s rights is the supreme corporate body. The founder’s rights can be transferred inter vivos by assignment. The establishment without founder’s rights is administered and represented by the board of directors as the supreme corporate body. The board of directors shall administer the establishment for the purposes established by the founder in the articles of association and bylaws. It is generally incumbent upon the board of directors to manage the establishment’s business and to represent the establishment towards third parties.

The purpose of an establishment can be of an economic or non-economic nature and it can be in any legally permissible form, eg, trade in goods, acquisition of participations, financing, management of real estate, management of assets for specific beneficiaries or for purely charitable purposes. The purpose of the establishment must be lawful and reasonable.

The capital can be specified in Swiss francs, euros or US dollars. The minimum nominal capital is CHF30,000.00, EUR30,000 or USD30,000. If the establishment’s capital is divided into shares, it must be at least CHF50,000, EUR50,000 or USD50,000. The formation of the establishment can be in cash or in kind. The minimum capital must have been fully paid up or contributed upon the formation of the establishment. The capital is at the establishment’s free disposal, as soon as it has been entered in the commercial register.

Trusts are recognised in Liechtenstein (see 3.1 Types of Trusts, Foundations or Similar Entities).

Foreign Trusts, Foundations and Similar Entities as Such

A trust, foundation or similar entity that is neither seated nor effectively managed in Liechtenstein does not itself become a Liechtenstein taxpayer. Corporate income tax attaches to legal entities only where their registered office or their place of effective management is domestic; a foreign vehicle administered abroad falls outside this scope irrespective of the residence of its settlor, founder or beneficiaries.

Attribution to Liechtenstein-Resident Settlors, Founders and Beneficiaries

This does not, however, place the vehicle beyond the reach of Liechtenstein taxation. Individuals who are resident or have their habitual abode in Liechtenstein are subject to unlimited tax liability on their entire worldwide wealth and income. Where such a person acts as settlor or founder of a foreign trust, foundation or similar entity, the same attribution principles that apply to domestic vehicles are engaged:

• assets held through a revocable foreign structure are attributed to, and taxed in the hands of, the founder or settlor; and
• assets held through an irrevocable foreign structure may, on request by the beneficiary and with the consent of the trustee or foundation council, be taxed as the beneficiary’s own wealth, in which case the foreign vehicle assumes the wealth or income tax liability in place of the beneficiary; absent such an election, the founder or settlor remains taxable.

Dedication Tax Where No Election Is Made

Where the transfer of assets to a foreign structure results in those assets ceasing to be subject to Liechtenstein wealth tax, and the resulting benefits or interests are not individually determinable in value, and no election for beneficiary-level wealth taxation has been made, the transferor is instead subject to a dedication tax of 3.5% of the wealth-tax value of the assets transferred.

Relief From Double Taxation

Double taxation is mitigated where a relevant double taxation agreement provides for an exemption in respect of assets located, or income arising, in the other contracting state, or where relief is granted on a reciprocal basis.

Taxation of a Fiduciary

Liechtenstein does not levy a separate fiduciary income tax on estate or trust assets as such. Income-producing assets held in a fiduciary capacity – bonds, fund units, rental property, savings accounts and equities among them – are treated as the personal income of whichever taxpayer the assets are attributed to under the applicable attribution rule, regardless of the fact that the income derives from an estate, trust, foundation or similar entity.

Taxation of a Beneficiary

For beneficiaries, the tax consequence follows the character of the distribution received. A distribution is subject either to wealth tax or property tax, or to personal income tax; where the underlying asset (for example, a bond, fund or security) is not itself subject to wealth tax, the distribution is taxed as personal income instead.

Revocable Versus Irrevocable Structures

The taxpayer identity depends on the revocability of the structure.

• Beneficiaries of an irrevocable foundation, trust or foundation-like establishment may, with the consent of the trustee or foundation council, elect to be taxed on the underlying wealth in their own right – where this election is made, the entity discharges the wealth or income tax liability on the beneficiary's behalf.
• Absent such an election – and in every case involving a revocable foundation, trust or foundation-like establishment – the assets are attributed to, and taxed in the hands of, the founder or settlor.

Tax Consequences at the Point of Transfer

A further consequence attaches at the point of transfer: where assets are contributed to an entity that thereby ceases to be subject to wealth tax, and no benefit or share becomes individually subject to wealth tax, and no election under the preceding paragraph has been filed, the transferor incurs a one-off dedication tax of 3.5% of the wealth-tax value of the transfer. This liability sits alongside, and is independent of, the ongoing income or wealth tax consequences borne by the fiduciary or beneficiary described above.

The Liechtenstein regime on private foundations, trusts or similar entities is the most popular method for asset protection planning. It has now almost 100 years of history and development. The Liechtenstein foundation is well known in Europe and around the world (for details on private foundations, trusts and establishments see 3.1 Types of Trusts, Foundations or Similar Entities).

In addition, life insurance (PPLI) is also a widely used tool.

Legal Structures

The above-mentioned private foundations and trusts (see 3.1 Types of Trusts, Foundations or Similar Entities) are the most popular succession planning strategies and structures in Liechtenstein.

Dispositions During Lifetime

In addition to such structures, Liechtenstein recognises the transfer of real property and companies from one generation to the next generation. Property can also be transferred to the next generation with the registration of a right of use (Nutzniessung) for the parents. With regard to real estate, such right of use must be registered in the land register for effect on property. Contractual arrangements are also common, eg, free lease of the land.

Shares in business companies can be transferred by gift or sale and purchase agreement. Successors can acquire a small share and get pre-emption rights on the remaining shares.

Successors must consider the wealth tax on real property in Liechtenstein and participation rights.

Estate Dispositions

Liechtenstein inheritance law comprises statutory succession and testamentary succession. If no testamentary dispositions are made, intestate succession applies.

Testamentary dispositions can be made in a Will or contract of inheritance, among other things (subject to forced heirship). If only one or more person is appointed without restricting them to a part of the estate, they receive the entire estate. If the appointed heirs have only been granted a specific part of the estate in relation to the whole, the remaining parts go to the legal heirs. The Will of the testator must be specific and declared in full awareness, with deliberation and seriousness, free from coercion, fraud and material error. The last Will can be handwritten without witnesses, typed in front of three independent witnesses who are not related to the heirs, or declared before the court, even in one’s own words before the court. Such an oral Will is recorded in a court protocol.

The heir receives the assets and debts unless declared otherwise.

Liechtenstein levies neither gift nor inheritance tax. However, Liechtenstein levies a wealth tax or property tax (Vermögenssteuer). The partial interest is part of the wealth of the receiving taxpayer. Such asset is valued at fair market value (no discount).

Trends driving dispute resolution are moving towards arbitration in certain areas. Although Liechtenstein has a good judicial system with three court levels, arbitration is an alternative.

Disputes between private foundations and trusts and the beneficiaries or other persons are subject to the Liechtenstein Princely Courts (Fürstliche Gerichte), ie, the court of first instance (Fürstliches Landgericht), the High Court (Fürstliches Obergericht) and the Supreme Court (Fürstlicher Oberster Gerichtshof). All courts have distinguished jurisprudence on private foundations and trusts, beneficiary rights and responsibility of the Foundation Council or the trustee. Liechtenstein has a newly developed arbitration association and arbitral tribunals for arbitration of foundation law. As a consequence of the long history of foundation, Liechtenstein arbitral judges are highly competent in the respective areas.

The business judgement rule (see 6.2 Fiduciary Liabilities) is part of Liechtenstein civil law.

Most recently, the Liechtenstein Princely Supreme Court has ruled on:

• the legal position of the beneficiary and the official involvement of a “material” party;
• the responsibility of the foundation board in asset management in the sense of a fault of assumption;
• the dissolution and liquidation of a foundation due to divorce;
• the insurer’s duties of disclosure and information towards the foundation and the beneficiary;
• the beneficiaries’ rights to information and disclosure; and
• the requirements for amendments to the articles of association by foundation bodies.

Liechtenstein is subject to the civil law on damages. Damages need to be verified by the claimant to receive compensation. Liechtenstein does not recognise punitive damages.

Compensation for damages can be granted by the Liechtenstein courts or the Arbitral Tribunal after a proceeding. Save for Austria and Switzerland, Liechtenstein is not party to any multilateral agreement on enforcement of legal titles. Liechtenstein entered into a bilateral agreement on the enforcement of legal titles with Austria and Switzerland only. As a consequence, it is difficult to receive compensation with a foreign legal title. Liechtenstein civil procedure law recognises a special proceeding on the law enforcement of foreign legal titles. Such proceeding is a new civil proceeding regarding the validity of the foreign title.

Liechtenstein has a well-developed system of corporate fiduciaries. These professionals are members of the Liechtenstein Chamber of Trustees and subject to strong corporate governance and disciplinary guidelines (Standesrichtlinien). Currently, approximately 300 trustees and trustee services companies are registered with the Financial Market Authority. Small flexible firms, mid-size firms with a range of services (corporate services, accounting, and legal advice) and big multi-service companies exist. All members of the Liechtenstein Chamber of Trustees are subject to very high standards of conduct and execution of professional services.

Fiduciaries and trustees can be held liable for liabilities of the entity based on civil law. In accordance with the international business judgement rule, trustees are not liable if the entity is administered and managed, namely:

• there were no conflicts of interest;
• the decision has been made formally and correctly by the responsible body and in compliance with all regulations (eg, approval quorums); and
• there is an appropriate information base, which has been evaluated in a proper decision-making process.

If these requirements are met, the court will only examine the content of the decision with restraint. Otherwise, the courts will carry out a strict examination of the content of the decision. The most important requirement is a proper decision-making process based on an adequate information base.

Some trustees enter into an indemnity agreement with the ultimate beneficial owner for protection from liability. Trust deeds often include such clause of indemnification, save for fraud and wilful misconduct. In addition, professional liability insurances are also often in place.

Liechtenstein law and the Code of Conduct of the Liechtenstein Chamber of Trustees regulate fiduciary investment of assets and encourage fiduciaries to invest prudently. According to the Code of Conduct of the Liechtenstein Chamber of Trustees, the trustees are under an obligation to act prudently.

Liechtenstein does not recognise a special investment theory or a particular investment standard applied to the fiduciary investment of assets. Prudent investment actions are governed by Liechtenstein laws on banks, asset managers and brokers. Diversification of assets is recommended above a mid-size level of property. However, there is no requirement on fiduciaries regarding the investment strategy. Trusts, private foundations or similar entities are authorised to hold active businesses. Trusts are entitled, by virtue of the entity owning that asset, to effectively run the business. Conversely, the private foundation is not entitled to run a business. Foundations may serve as passive holding entity.

Short-Term Stay

No restrictions or qualifications apply to visitors staying for no longer than three months without the intention to work. However, nationals of countries listed in Annex I of Regulation (EU) 2018/1806 are subject to the visa requirement for short-term stays.

Residency

The government is competent for the granting of residence permits. EEA residents and Swiss citizens are subject to the Act on the Freedom of Movement of Persons (PFZG). Third-country nationals are subject to the Act on Foreigners (AuG). Within the scope of the AuG, permits are granted under consideration of national interest only. Those awarded residence are entitled to family reunions (Article 40 and the following PFZG; Article 32 and the following AuG).

Applications for residence permits must be filed with the government and are treated independently.

Permits for staying longer than three months are granted very selectively (maximum number defined by law). As many high-net-worth individuals and other private clients or distinguished professionals needed by the industry are favoured by the government, residence permits are usually granted for these categories by the government.

Notwithstanding the ordinary permit procedures under PFZG (granting of government), residence permits are also issued to EEA nationals by drawing lots. The draw takes place in a two-stage procedure. There are usually two draws per calendar year.

Nationality

The requirements to be met in order to qualify for nationality are stipulated in the Citizen Act (BüG). Liechtenstein follows the principle of ius sanguinis: any child of a mother or father with citizenship of the Principality becomes a Liechtenstein citizen. Other options for obtaining nationality are as follows.

• Ordinary procedure – takes place via admission to municipal citizenship, which is decided in a vote by the citizens of the municipality residing in the municipality. The applicant must have been ordinarily resident in Liechtenstein for ten years and renounce their previous citizenship.
• Marriage/registered partnership – the applicant has been married/in a registered partnership to a Liechtenstein citizen for at least five years, is ordinarily resident in Liechtenstein and has renounced their previous citizenship.
• Long-term residence – requires 30 years of regular residence in Liechtenstein, whereby the years up to the age of 20 are counted twice. The applicant must renounce their previous citizenship.
• Statelessness – requires five years of regular residence in Liechtenstein. The applicant was born in Liechtenstein and has been stateless since birth and has not yet reached the age of 21.

Liechtenstein does not provide any investor or other special categories for obtaining citizenship.

The concept of tax on expenditure or lump sum taxation is designed to attract wealthy foreigners (see 1.3 Income Tax Planning).

Liechtenstein does not have a special planning mechanism for minors or for adults with disabilities like a special needs trust. Protection of minors and adults with disabilities are covered by civil law and social security laws.

Liechtenstein recognises the appointment of a guardian for minors and adults with mental disabilities under special legal provisions. The guardian shall assist and represent a person who is unable to manage all or some of their own affairs without risk of disadvantage to themselves.

Proceedings for the appointment of a guardian are initiated at the Princely Court at the suggestion of the person concerned, their relatives or close associates, a social institution or even ex officio. If a guardianship is established following the legally binding conclusion of the proceedings, the guardian is appointed for those matters in which the person concerned requires representation.

Legal representation includes representing the person concerned before offices, authorities and social insurance companies and asserting financial claims, managing assets and income. The guardian identifies themselves as a legitimate representative vis-à-vis the authorities, insurance companies and banks with the court order. The guardian shall ensure that at least the basic needs of the person concerned are met with the financial assets. The guardian responsible for the management of real estate shall be registered with the land register. The guardian is obliged to have residential buildings adequately insured by a building insurance company. The guardian is not obliged to take over the care and maintenance of the person concerned. However, they are obliged to make appropriate efforts to organise medical care and social support.

A disabled person can only consent to medical treatment if they are capable of understanding and judgment. Capacity of understanding and judgment is given if the disabled person is able to understand the reason for and significance of the medical treatment, to assess the consequences and risks of treatment and to determine their Will accordingly. The guardian must obtain sufficient information from the attending physician before consenting to or refusing medical treatment. Medical treatment that is usually associated with a serious or lasting impairment of physical integrity or personality is only permissible if a medical expert, independent of the attending physician, confirms in a medical certificate that the disabled person does not have the necessary capacity of understanding and judgment and that the treatment is necessary to safeguard their wellbeing. In the event of “imminent danger”, a medical doctor can carry out urgent medical treatment even without the consent of the guardian and the approval of the guardianship court. In principle, the guardian may not consent to the sterilisation of the person concerned. An exception to this prohibition exists if the life or health of the person concerned would be endangered without this intervention due to a physical ailment. Such decision requires a separate court approval.

A disabled person decides on their place of residence themselves. The guardian has no coercive powers. However, the guardian must take care of this task in so far as this is necessary to safeguard the welfare of the disabled person. The guardian cannot force the person concerned to actually reside at a newly determined place of residence.

Alternatives to guardianship are the help of the family or a privately authorised representative, in some cases assisted by care facilities or facilities for the disabled or within the framework of social or psychosocial services.

Liechtenstein law recognises the advance power of attorney (Vorsorgevollmacht) as the principal instrument for planning ahead of a future loss of capacity. Under Sections 284b to 284c, ABGB, a Vorsorgevollmacht is a power of attorney that becomes effective only once the grantor loses the legal capacity, insight or ability to communicate that is required to manage the matters entrusted to the attorney. The matters covered by the power must be specifically described, and the attorney may not stand in a relationship of dependency or other close relationship with a care institution in which the grantor resides or is looked after (Section 284b, ABGB). A validly granted and properly exercised Vorsorgevollmacht generally makes the appointment of a court-supervised Sachwalter (see 8.2 Appointment of a Guardian) unnecessary for the matters it covers (Section 284c, ABGB).

A person may also record, in a Sachwalterverfügung, their wishes as to who should act for them if a guardian ultimately has to be appointed; the court must take such wishes into account when selecting the Sachwalter (Section 279, ABGB). Both instruments, together with any revocation, are recorded in the Central Representation Register (Zentrales Vertretungsverzeichnis) kept by the Princely Court of First Instance, which allows third parties such as banks and authorities to verify whether, and to what extent, an advance arrangement has taken effect (Section 284e, ABGB).

For healthcare decisions specifically, the Patient Directives Act (Patientenverfügungsgesetz, PatVG, LGBl 2011 Nr 209, in force since 1 January 2012) allows an individual to refuse specified future medical treatment in advance for the case that they are no longer able to understand, judge or communicate. The PatVG distinguishes between a binding directive, which must describe the treatments refused with sufficient precision, follow a documented medical consultation and be executed before a lawyer or the Landgericht, and a directive that does not meet these formal requirements but must still be given due weight by the treating physician. A binding directive must be renewed at regular intervals to remain effective.

In practice, advisers typically recommend combining a Vorsorgevollmacht covering financial and personal matters with a Patientenverfügung covering medical treatment, since the two instruments address different aspects of incapacity and are registered and exercised separately. Because Liechtenstein has no separate statutory concept of representation by close relatives outside these instruments, clients without a Vorsorgevollmacht or Patientenverfügung in place remain dependent on the court-supervised guardianship procedure described at 8.2 Appointment of a Guardian.

Liechtenstein social security laws, eg, obligatory private pension funds in addition to minimum pension protection for elderly people, obligatory health insurance for all citizens, cover the protection of elder people.

Municipalities manage retirement homes and residential homes for the elderly. For the future, Liechtenstein establishes a professional social security and health insurance system based on stable state finances and avoidance of public debt respectively.

Children born out of wedlock, adopted children and posthumously born children are treated like marriage-born children regarding inheritance. These children can also be part of the class of beneficiaries, subject to the provisions of the private foundation or the trust. Surrogate pregnancy arrangements are forbidden in Liechtenstein.

On 1 September 2011, the Act on the registered partnership for same-sex couples entered into force. Hence, same-sex partnerships are permitted and recognised in Liechtenstein.

Marriage for all (Ehe für alle) entered into force on 1 January 2025 (LGBl 2024.261). Since then, marriage is defined in gender-neutral terms as the full and undivided community of life of two persons established by contract (Article 1, EheG), and is therefore open to couples irrespective of sex. As a consequence, civil-law relationships, including legal succession, tenancies and other personal matters, are treated equally regardless of the spouses’ sex. New registered partnerships can no longer be entered into; existing registered partnerships continue and may be converted into a marriage.

Liechtenstein does not treat unmarried cohabitation (faktische Lebensgemeinschaft) as equivalent to marriage or a registered partnership for succession or tax purposes, although the ABGB increasingly recognises the Lebensgefährte as a distinct category for specific, targeted purposes.

For succession, only the descendants and the spouse or registered partner of the deceased are entitled to a compulsory portion; the cohabiting partner is expressly excluded (Section 763, ABGB, see 2.3 Forced Heirship Laws). A cohabiting partner therefore inherits only if named in a Will, an inheritance contract or under a specific statutory legacy. One such legacy exists under Section 677, ABGB, which grants a person close to the deceased, including a cohabiting partner, a statutory legacy where that person provided the deceased with care of more than minor extent for at least six months during the last three years of their life, unless already compensated. Conversely, acts of violence or gross neglect of duty by a cohabiting partner towards the deceased can constitute grounds for disinheritance under Section 768, ABGB, on the same basis as apply to spouses and registered partners.

Testamentary dispositions in favour of a cohabiting partner are automatically revoked on separation of the parties during the deceased’s lifetime, unless the deceased has expressly provided otherwise (Section 725, ABGB); the same rule applies to an inheritance contract between cohabiting partners, which may be unilaterally revoked upon dissolution of the relationship (Section 602d, ABGB).

Outside succession law, cohabitation does produce some direct legal consequences. Under Article 45 Abs 2, ABGB, the rights and obligations of a residential lease pass on the tenant’s death to the cohabiting partner, provided the partner shared the household with the deceased, on the same footing as a spouse, registered partner or close relative. No comparable statutory regime of shared or accrued property exists for cohabiting partners: there is neither a default community-of-property regime nor any automatic claim to assets accumulated during the relationship, in contrast to the optional matrimonial property regimes available to spouses (see 2.4 Marital Property).

For tax purposes, cohabiting partners are assessed independently; the joint assessment available under Article 8, SteG applies only to spouses and registered partners living together, not to unmarried couples, so income and wealth are neither aggregated nor eligible for the joint basic allowance under Article 19 Abs 1 lit c, SteG.

Given this absence of default protection, advisers generally recommend that cohabiting couples address their position expressly through a combination of instruments: a Will or inheritance contract to secure succession rights beyond the statutory legacy under Section 677, ABGB, a cohabitation agreement regulating the division of jointly acquired assets on separation or death, lifetime gifts or joint ownership arrangements (Miteigentum) for shared property, and beneficiary designations under life insurance policies, which fall outside the estate and can be freely directed to the partner.

Charitable contributions to legal entities are tax exempt from personal income tax if the receiving persons are also exempt from tax liability. The exemption is limited up to a maximum of 10% of the taxable income. Donations exceeding the total amount of CHF300 must be proven by disclosing the receipts.

Legal persons that serve only charitable purposes to the exclusion of any commercial activity are tax-exempt, eg, charitable foundations or trusts.

Liechtenstein offers a good environment for charitable structures. The total number of charitable foundations in Liechtenstein increased up to a total of 1,400 charitable foundations registered with the Liechtenstein Foundation Supervisory Authority.

Liechtenstein foundation law is characterised by the liberal attitude. Liechtenstein law does not impose any restrictions on the geographical area of activity of Liechtenstein charitable foundations. Even in the case of tax exemption, there is no requirement that a certain portion of the distributions must remain in the country. The prohibition on self-purpose foundations in Liechtenstein requires that charitable foundations are active externally. This means that the distributions should be higher than the costs. As no further specific requirements regarding the ratio of costs to distributions or detailed distribution ratios are imposed, this seems to be an advantage of the location compared to other jurisdictions whose more detailed requirements can often only do limited justice to the diversity of reality.

In principle, existing charitable foundations can transfer their registered office to or from Liechtenstein, provided that a comparable supervisory regime can be demonstrated. Accordingly, existing charitable foundations from abroad are often relocated to Liechtenstein.

Liechtenstein included a new option for philanthropic activities in 2015, the “protected cell company” (PCC). The PCC is a new organisational form under company law for existing legal entities or entities to be established. It is possible to set up a PCC as an umbrella organisation to pursue charitable purposes. Apart from the core element, the foundation as a PCC consists of one or more cells, also called segments. The assets of the individual segments are separated from each other and from the assets of the core ‒ and remain separate. Each of the segments is subject to its own area of activity or purpose, which is described in more detail in the documents of the charitable foundation. One segment may be dedicated to environmental protection and another to pursuing social causes. Specific assets are allocated to each segment to achieve the purpose. One advantage of this new option for structuring a charitable foundation is, inter alia, limited costs and structuring of asset classes and purposes.