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Martina Walt
TLS Partner, PwC Liechtenstein, PwC Switzerland
The OECD’s Base Erosion and Profit Shifting Project (BEPS) aims to secure international tax equality in a world that is constantly changing, especially in terms of digitalisation and globalisation of companies and the economy. One of the key aspects of BEPS 2.0 is the introduction of a global minimum tax rate. With the "Global Anti-Base Erosion (GloBE)" rule, MNE (multinational enterprise) groups are subject to a minimum effective tax rate of 15% once they reach annual global consolidated sales of more than 750 million euros.
On 28 March 2023, the government of Liechtenstein published the consultation report on the implementation of the OECD GloBE Model Rules. The consultation period will run until 2 June 2023 and is to be discussed in parliament in September 2023.
Article 2 paragraph 1 contains a direct and static reference to the OECD GloBE Model Rules as of today into national law. Therefore, future adjustments of the OECD GloBE Model Rules will not be transferred into the national law of Liechtenstein automatically, but will be implemented via separate future regulations.
The GloBE rules of Liechtenstein implement the requirements of the OECD GloBE Model Rules and will therefore introduce, with Article 1 of the GloBE-Law in Liechtenstein, the following:
- a) Liechtenstein supplementary tax, which is also known as "Qualified Domestic Minimum Top-up Tax" (QDMTT)
- b) IIR supplementary tax ("Income Inclusion Rule"), and
- c) UTPR supplementary tax ("Under-taxed Profit Rule").
In this context, the question arises as to which jurisdiction is allowed to raise the tax difference of the national tax rate and the GloBE minimum tax rate of 15%.
The QDMTT ensures that the tax authorities in Liechtenstein can effectively raise the 15% tax rate from a business unit of an MNE in Liechtenstein. With the implementation of the GloBE Model Rules, the tax authorities in Liechtenstein are allowed to charge possible "Top-up Taxes" and prevents other jurisdictions to levy the tax difference.
With the IIR supplementary tax, the tax authorities in Liechtenstein are able to secure the ‘Top-up Taxes’ at parent-company level in Liechtenstein from a foreign subsidiary if the GloBE tax rate of 15% is not reached.
The UTPR supplementary tax ensures the raising of the effective 15% on business units in Liechtenstein from other group companies. In this way, the "Top-up Tax" of a possible sister or parent company can be raised, but only if the IIR supplementary tax is not implemented in the affected jurisdiction of the parent company. The GloBE Model Rules therefore give priority in raising “Top-up Taxes” to jurisdictions with QDMTTs.
Article 13 of the GloBE law in Liechtenstein defines how the supplementary taxes can be levied. Hence the taxpayer must file a single tax return in each case. The tax base according to the GloBE basis is based on the financial statements relevant to the consolidated financial statements, taking GloBE corrections into account. This requires a large amount of data from MNEs. In this case an extensive data strategy, assessment of operational readiness or determination of a modelling approach will be central in the analysis. We refer to this in our corresponding GloBE data input catalogue.
The specification of the recognised accounting standards of the parent company is, according to Article 5 paragraph 2 lit. c of the GloBE law, decisive for the consolidated financial statements. Therefore, the US GAAP, IFRS and the accepted IFRS of the EU according to Regulation (EC) No. 1606/2002, which were transferred in the EEA, as well as the recognised accounting principles of the EEA member states, are recognised. Consequently, the "Liechtenstein Persons and Companies Act (PGR)" is, according to the consultation report, also accepted as an accounting standard.
It should be noted that most of the GloBE rules refer to the relevant accounting, and a deeper knowledge of accounting standards is required for their interpretation.
All legal entities such as AG and GmbH, but also establishments (Anstalt), foundations and trusts qualify for GloBE-relevant legal entities, including if (for instance) the PGR in Liechtenstein exempts them from preparing consolidated financial statements.
As a simplified interim solution, Liechtenstein will – according to Article 29 of the GloBE law – take over the OECD’s "safe harbour" clauses.
After the consultation process has been completed and if the referendum deadline has not been used, the law is expected to come into force according to Article 32 of the GloBE law on 1 January 2024 and be applicable for the tax years beginning from the same day. This is not the same for the UTPR supplementary tax, which shall only be applicable for tax years beginning from 1 January 2025.
Further information about the global minimum corporate tax rate is available on our PwC-Website.
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Contact us
Martina Walt
Partner, Leiterin Steuerabteilung, PwC Liechtenstein, PwC Switzerland
Tel: +41 58 792 68 84
