page_title: Liechtenstein
section_title: Taxation
hierarchical_section_title: Liechtenstein / Economy / Taxation
caption_attribution_description: English: The border between Liechtenstein (Balzers) and Switzerland (Trübbach). In the background, Gutenberg Castle and the Liechtenstein Alps. Deutsch: Die Grenze zwischen Liechtenstein (Balzers) und Schweiz (Trübbach). Im Hintergrund, die Burg Gutenberg und die Liechtensteiner Alpen. Français&#160;: La frontière entre le Liechtenstein (Balzers) et la Suisse (Trübbach). À l'arrière-plan, le chăteau de Gutenberg et les Alpes liechtensteinoises.
context_page_description: Liechtenstein, officially the Principality of Liechtenstein, is a German-speaking microstate situated in the Alps and in the southwest of Central Europe. The principality is a semi-constitutional monarchy headed by the Prince of Liechtenstein; the Prince's extensive powers are equivalent to those of a President in a semi-presidential system.
  Liechtenstein is bordered by Switzerland to the west and south and Austria to the east and north. It is Europe's fourth-smallest country, with an area of just over 160 square kilometres and a population of 38,749. Divided into 11 municipalities, its capital is Vaduz, and its largest municipality is Schaan. It is also the smallest country to border two countries. Liechtenstein is one of only two doubly landlocked countries in the world, along with Uzbekistan.
  Economically, Liechtenstein has one of the highest gross domestic products per person in the world when adjusted for purchasing power parity. The country has a strong financial sector centered in Vaduz. It was once known as a billionaire tax haven, but is no longer on any blacklists of uncooperative tax haven countries.
context_section_description: The government of Liechtenstein taxes personal income, business income, and principal (wealth). The basic rate of personal income tax is 1.2%. When combined with the additional income tax imposed by the communes, the combined income tax rate is 17.82%. An additional income tax of 4.3% is levied on all employees under the country's social security programme. This rate is higher for the self-employed, up to a maximum of 11%, making the maximum income tax rate about 29% in total. The basic tax rate on wealth is 0.06% per annum, and the combined total rate is 0.89%. The tax rate on corporate profits is 12.5%.
  Liechtenstein's gift and estate taxes vary depending on the relationship the recipient has to the giver and the amount of the inheritance. The tax ranges between 0.5% and 0.75% for spouses and children and 18% to 27% for non-related recipients. The estate tax is progressive.
  Liechtenstein has previously received significant revenues from Stiftungen ("foundations"), financial entities created to hide the true owner of nonresident foreigners' financial holdings. The foundation is registered in the name of a Liechtensteiner, often a lawyer. This set of laws used to make Liechtenstein a popular tax haven for extremely wealthy individuals and businesses attempting to avoid or evade taxes in their home countries. In recent years, Liechtenstein has displayed stronger determination to prosecute international money launderers and worked to promote an image as a legitimate finance center. In February 2008, the country's LGT Bank was implicated in a tax-fraud scandal in Germany, which strained the ruling family's relationship with the German government. Crown Prince Alois has accused the German government of trafficking in stolen goods, referring to its $7.3 million purchase of private banking information offered by a former employee of LGT Group. The United States Senate's subcommittee on tax haven banks said that the LGT bank, owned by the princely family, and on whose board they serve, "is a willing partner, and an aider and abettor to clients trying to evade taxes, dodge creditors or defy court orders".
  The 2008 Liechtenstein tax affair is a series of tax investigations in numerous countries whose governments suspect that some of their citizens have evaded tax obligations by using banks and trusts in Liechtenstein; the affair broke open with the biggest complex of investigations ever initiated for tax evasion in Germany. It was also seen as an attempt to put pressure on Liechtenstein, then one of the remaining uncooperative tax havens—along with Andorra and Monaco—as identified by the Paris-based Organisation for Economic Co-operation and Development in 2007. On 27 May 2009 the OECD removed Liechtenstein from the blacklist of uncooperative countries.
  In August 2009, the British government department HM Revenue & Customs agreed with Liechtenstein to start exchanging information. It is believed that up to 5,000 British investors have roughly £3 billion deposited in accounts and trusts in the country.
  In October 2015, the European Union and Liechtenstein signed a tax agreement to ensure the automatic exchange of financial information in case of tax disputes. The collection of data started in 2016, and is another step to bring the principality in line with other European countries with regard to its taxation of private individuals and corporate assets.
caption: Since 1923, there has been no border control between Liechtenstein and Switzerland.
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