Liechtenstein is a micro-state situated entirely in the Alps and bordering Switzerland and Austria.
Liechtenstein has an very diverse national economy with numerous small and medium-sized enterprises. The high value-added is particularly due to the strong industrialsector and financial services. Financial services traditionally contribute about 25% of Liechtenstein's gross value added. The attractiveness of Liechtenstein as a financial centre is enhanced by the political continuity of the country, its stable currency (Swiss Franc) and legal certainty.
Liechtenstein banks have always specialised in private banking and wealth management, these banks do not engage in investment banking. They are among the best-capitalised banks in Europe. Compared to other European countries, they have a high equity ratio of 15% on average and did not require state aid during the financial crisis.
|Population (2016)||37 622 (+0.01%)|
|EU Status||not a member|
|National Currency||CHF (Swiss franc)|
|Exchange Rate (2017-01-19)||1 EUR = 1.0729 CHF|
|Nominal GDP (2012)||4.3 bln EUR (+0.02%)|
|Nominal GDP per Capita (2011)||114 700 EUR (+0.07%)|
|CPI, Year Average (2012)||-0.7 % (2011: 0.2 %)|
|Unemployment Rate (2011)||2.5 % (2010: 2.2 %)|
|Credit Ratings (as of Sep 2016)|
|Withholding Tax||0.0 - 0.0%|
|Double Taxation Agreements||10 signed agreements|
|Exchange on Request||26 signed agreements|
|Automatic Exchange||starts in September 2017|
|FATCA||IGA in effect since 19 May 2014, Model 1|
|Banking Industry Country Risk||2||(1 - lowest risk, 10 - highest risk)|
|Deposit Guarantee Scheme|
|Maximum Protected Amount||100 000 CHF|
|Country Ceiling for Deposits|
|Banking Sector Structure|
|Number of Banks||15|
|Recent Changes (2015)||new banks: 0, closed banks: 1|
|Consolidated Assets (2014)||63 354.00 mln CHF (+10.99%)|
|Liechtensteinische Landesbank AG||Centrum Bank AG|
|LGT Bank AG||NEUE BANK AG|
|Verwaltungs- und Privat-Bank AG||Bank Frick & Co. AG|
|List of Banks in Liechtenstein|
On 26 May 1924, Liechtenstein declared the Swiss franc (CHF) the legal currency of Liechtenstein. All coins, banknotes and other payment media used in Switzerland were recognised as official legal tender in Liechtenstein.
During the last 11 years EURCHF exchange rate was within the range 1.0341 - 1.6762, reaching its maximum in Oct 2007 and falling to its minimum in May 2015.
According to Eurostat, nominal GDP of Liechtenstein in 2012 was 4.3 bln EUR.
In 2011, nominal GDP per capita in Liechtenstein was 114 700 EUR.
According to Office of Statistics (Liechtenstein), inflation rate in Liechtenstein in 2012 expressed as annual percentages of average consumer prices was -0.7% which was below the Euro Area average (2.5%) and below the European Union average (2.6%).
Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.
Withholding tax rates applied on payments of interest and dividends in Liechtenstein are shown in Table 1.
|Natural person, resident||0.0||0.0|
|Natural person, non-resident||0.0||0.0|
Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.
Liechtenstein signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Liechtenstein and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.
Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.
Liechtenstein signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Liechtenstein and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):
Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.
Liechtenstein signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.
Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).
Liechtenstein has FATCA agreement with the U.S. in effect since 19 May 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Liechtenstein are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Liechtenstein's financial accounts hold in U.S. financial institutions will be reported to Liechtenstein's authorities.
FATCA and European countries
Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.
Liechtenstein is included into group '2' with economic risk scored '2' and industry risk scored '3'.
|Credit risk in economy||low|
|Government support assessment||supportive|
Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.
From a depositor's point of view it is important to know:
All these details about deposit guarantee scheme in Liechtenstein are summarised in Table 3.
|Scheme Participants||all credit institutions operating in Liechtenstein (including branches of foreign banks), branches of Liechtenstein's banks abroad|
|Covered Accounts||account balances of all kinds as well as call money and time deposits|
|Maximum Protected Amount||100 000 CHF|
|Paid In Currency||CHF|
Table 3. Deposit guarantee scheme in Liechtenstein.
Deposit Guarantee Schemes in Europe
Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.
Foreign currency deposit ceiling for Liechtenstein] is Aaa (prime).
Currently there are 15 credit institutions operating in Liechtenstein.
Recent structural changes (2013 - 2015) of the banking sector of Liechtenstein are summarised in Table 4.
|Number of Opened Banks||0||0||0|
|Number of Closed Banks||0||0||1|
Table 4. Recent structural changes in the banking sector of Liechtenstein.