The Liechtenstein Equation

Trust is the heart of all solutions

Economic globalization has led to close dependencies between the international financial markets and has created a need for greater transparency all over the world. Liechtenstein’s trust and financial services industry has also had to confront this change. Just like PwC Liechtenstein knows that trust cannot be bought, it has to be earned. Therefore, every interaction, relationship and outcome must focus on it. In the last 15 years the Principality has ushered in comprehensive changes. The country pursues a consistent white-money strategy and in the 2009 Liechtenstein Declaration set down its commitment to the OECD standards on transparency and the exchange of information in tax matters as well as global minimum tax. Since then, the country has been steadily strengthening the regulatory framework governing the trust and financial industry by way of an extensive web of bilateral and multilateral agreements on double taxation and the exchange of information.

Trust remains the basis of any successful relationship in the trust business. One of Liechtenstein’s strengths lies in its ability to defend this trust as its most precious asset.

In the past few years international regulations have also become drastically tighter in an attempt to create transparency and prevent abuse. For years Liechtenstein has taken a zero-tolerance approach to money laundering and the financing of terrorism. As a member of the European Economic Area (EEA), it has implemented the EU’s 4th Anti-Money Laundering Directive and the Regulation on information accompanying transfers of funds. The relevant implementing provisions are to be found in the Due Diligence Act and Ordinance. In 2022 the International Monetary Fund (IMF) and Moneyval attested to Liechtenstein’s high standards in combating money laundering and the financing of terrorism. 

International Tax Developments

With the OECE Base Erosion and Profit Shifting Project (BEPS 2.0), new global minimum tax standards and a global minimum tax of 15% on a newly defined global basis (GloBE), offshore jurisdictions are cracking down and while tax is still an important factor, wealth structures are returning to onshore locations. Liechtenstein as a holding location offers tax and legal stability for corporations, foundations and trusts. With its forward looking, innovative and fast to market processes is well positioned to enjoy more international recognition. In particular the wide experience of trustees, financial advisors and bankers and their extensive experience allow to build up substance and leverage expertise for private wealth and investments structures and the assets under management. The financial service micro-cosmos, senior experience and quality that Liechtenstein offers is an important location promotor not only in relation to the EU / EEA market but also globally. 

The new Liechtenstein Equation

Liechtenstein may be a small country, but it does offer a whole range of interesting advantages, all of which create the ideal foundation for sustainable wealth and investment structures:

• The constitutional hereditary monarchy is built on parliamentary and democratic foundations going back to 1719. The Princely Family thinks in generations and avoids short-term changes of direction. This guarantees political stability.
• As a member of the European Economic Area (EEA) and a partner to Switzerland in a customs union, Liechtenstein is a gateway to two internationally established domestic markets.
• Liechtenstein has one of the longest tradition in asset management, fiduciary expertise and managing high net wealth investments. As a holding and investment location, it offers experienced, skilled and high quality employees that add actual substance and quality functions.
• The Liechtenstein banking system is very stable, with high Tier 1 ratios and solid equity funding ratios.
• Every year without fail, Standard & Poor’s gives Liechtenstein a triple-A rating. Thanks to strict budgetary discipline, Liechtenstein is one of the few countries without government debt.
• The production of goods accounts for around 43% of gross value added, one of the highest figures in the world.
• The completely revised law on companies, trusts and foundations is modern and flexible, responding to the needs of our times and providing many different options, especially when it comes to succession arrangements.
• After a complete revision of tax law in 2011, it meets all the international standards set by the EU and OECD. Liechtenstein is well positioned to also embrace the new challenge on global minimum tax (OECD BEPS 2.0 – Pillar 1 and Pillar 2).
• Around 38,000 people live in Liechtenstein. Added to this are more than 20,000 people who commute there to work every day. Liechtenstein has access to a rich pool of talent and qualified workers, especially in Austria and Switzerland.
•  Trust, innovation and thinking in generations is the new equation of Liechtenstein.