Liechtenstein is a top option for many businesses looking to expand. In addition to getting access to a market of wealthy clients, Liechtenstein’s taxation of foreign subsidiaries is straightforward when compared to other international markets. Once you have access to the Liechtenstein market, expanding your business to other European nations also becomes simple.
Do you intend to establish a subsidiary in Liechtenstein? To make it simple for you to move your activities abroad, this guide contains all the information you need to set up your subsidiary company in Liechtenstein.
What are the types of subsidiaries in Liechtenstein?
According to local regulations, Liechtenstein’s subsidiary system includes businesses that handle the parent company’s trade and other activities within the principality. It is either fully owned by the parent or jointly owned by local partners.
The percentage of public obligations and business ownership determines how these organizations differ from one another. In Liechtenstein, a subsidiary company may belong to any of the following categories:
AG or Aktiengesellschaft (Joint-stock company)
These businesses are open to public ownership and are appropriate for larger businesses. Like a PLC, their shares may be made available to the general public. However, the ownership share in the business limits public ownership. A board of directors and a certified local representative are required for these businesses.
GmbH or Gesellschaft mit beschränkter Haftung (Limited liability company)
These businesses are privately held and do not have publicly traded shares, as their name suggests. In Liechtenstein, these are the most common entities. The members’ liability is restricted to their individual contributions if a private sale of the ownership quotas is required.
Establishment (Anstalt)
These businesses are distinct since they don’t always have shares or a conventional public share structure. The founder’s rights dictate the contribution and distribution if the firm must be dissolved. This structure is frequently used to house international corporations’ subsidiaries and is very adaptable.
Trust enterprise (Treuunternehmen)
These are separate legal entities created by a deed of trust for business reasons, as the name implies. Liability is tightly restricted to the trust’s assets, but there are no limitations on the overall assets. Because of this, they are a reliable option for overseeing certain corporate operations inside a safe legal framework.
How to set up a subsidiary in Liechtenstein?
Setting up a subsidiary in Liechtenstein guarantees the independence of business owners. In Liechtenstein, a subsidiary firm is legally separate from its parent corporation.
To establish a subsidiary business in Liechtenstein, follow these steps:
- Name approval: Choose a name that sets the subsidiary apart and get confirmation from the Commercial Register.
- Physical office: Obtain and formally register a physical address inside the Principality.
- Capital deposit: To get a certificate of deposit, deposit the required capital, i.e., $38,075 (30,000 CHF) for a GmbH or $63,459 (50,000 CHF) for an AG, into a local bank.
- Commercial Register (Handelsregister) registration: After the business registration procedure is complete, you will receive an entry in the Office of Justice’s Commercial Register with your unique identification number (UID) and the registration date.
- Trade license: To lawfully engage in commercial operations, apply for a trade license from the Office of Economic Affairs.
- Tax registration: To register for taxes, go to the Liechtenstein Tax Administration. A flat corporate income tax of 12.5% applies to subsidiaries.
- Social security (AHV) registration: To manage required contributions, register your organization and staff with the National Social Security Administration (AHV/IV/FAK).
- VAT registration: You must register for a VAT number via the Tax Administration portal if your yearly turnover reaches $126,919 (100,000 CHF).
Benefits of setting up a Liechtenstein subsidiary
For any firm to succeed, location is crucial. Liechtenstein is one of the most appealing places for business owners because of the advantages of having a subsidiary there. They have the opportunity to work in a safe, well-run environment with reasonable taxes and a thriving market.
A straightforward tax system
Any firm would analyze the tax system of its desired location before contemplating a worldwide expansion. In this regard, Liechtenstein has one of the most manageable and reasonably priced tax systems with a variety of advantages.
A large workforce
Another factor contributing to Liechtenstein’s business success is the country’s highly qualified and bilingual workforce. Pre-established regulations designed with employee protection in mind are advantageous to employers.
Abundant opportunities
Right now, it’s one of the easiest times to do business in Europe. Because of this, this country is a hub for thriving business prospects with few barriers to starting new businesses for Swiss and EEA investors.
Robust infrastructure
Another foundation of economic success, which is already robust in Liechtenstein, is infrastructure. There are continuing initiatives aimed at enhancing digital financial services, communication, and transportation.
Documents to prepare when opening a subsidiary in Liechtenstein
The required documents must be submitted to incorporate a foreign subsidiary in Liechtenstein. The first step is to register your business and obtain the extract from the Commercial Register. This will display your company’s identification number and establishment date, and is a legal consequence.
The following personal details of founders and management are required to establish a private company:
- Place of birth and birthdate
- Directors’ and shareholders’ full names
- Proof of residency and residential address
- Valid copies of your ID or passport
- Certificate of police clearance
- Verification of the address of the local registered office
A charge is also required for the full submission of these papers, which you may pay with a bank transfer. Additionally, you’ll need:
- The official agreement to create the organization is included in a formation deed.
- An Article of Association that outlines the company’s regulations.
What business forms can Liechtenstein subsidiaries take?
A wholly owned subsidiary requires 100% ownership of its shares or quotas to incorporate a wholly-owned subsidiary in Liechtenstein. Companies with 50% or more ownership are considered subsidiaries. Under Liechtenstein law, these subsidiaries are completely independent legal entities.
You should get the necessary registration forms from the Office of Justice in order to set up your subsidiary in Liechtenstein. Liechtenstein subsidiaries are frequently private entities, such as Establishments or GmbHs.
Liechtenstein subsidiary laws
Liechtenstein’s subsidiary laws must be followed while forming a subsidiary firm. The Persons and Companies Act (PGR) must be followed by all Liechtenstein-based companies.
Public companies (AG)
- $63,968 (50,000 CHF) is the minimum capital.
- Before the business begins trading, at least 25% of these shares (or 100% of bearer shares) must be paid.
- There must be a minimum of one competent resident director.
Private businesses (GmbH)
- A minimum of $38,380 (30,000 CHF) is needed.
- It is not required to maintain public access to shares.
- Local residency requirements must be met by at least one director.
Post-incorporation compliance
Following registration, a foreign subsidiary in Liechtenstein must comply with the following requirements:
- Display details: Make the firm name and registered office address visible to the public.
- Continuous tax filing: For electronic tax declarations and annual filings, use the eTax portal.
- Annual audit: If the business satisfies the legal size requirements, designate a qualified auditor to examine financial accounts.
- Beneficial ownership: In accordance with anti-money laundering laws, list the company’s beneficial owners in the VwbP (Register of Beneficial Owners).
Taxation of Liechtenstein subsidiary
You should be aware of Liechtenstein’s tax laws before setting up a subsidiary. The Liechtenstein tax system is less complicated than that of other nations. This section gives you details on the taxation of foreign subsidiaries in Liechtenstein.
Salary taxes
Taxes, including national insurance payments, are levied at the source of every employment created in Liechtenstein. Social security payments (AHV/IV/FAK) apply to both employers and employees. The Social Security Administration is the recipient of these deductions.
Sales tax
Value Added Tax (VAT) is levied on any subsidiary company in Liechtenstein that manufactures products and services. For most items, the standard VAT rate is 8.1%. For 12 months, the VAT threshold is $127,936 (100,000 CHF).
Corporate Income Tax
The earnings that businesses make are subject to this tax. In Liechtenstein, corporate income tax is levied at a fixed rate of 12.5%. Trading earnings, capital gains, and investment income are all considered taxable profits. The company must make sure that payments and filings are made by the necessary yearly dates.
Tax incentives for businesses setting up a subsidiary in Liechtenstein
Liechtenstein offers several excellent benefits for the taxation of foreign subsidiaries. These are:
- Dividends paid to a foreign parent business are exempt from withholding tax.
- An interest deduction on equity allows corporations to reduce taxable profits.
- Intellectual property (patent) income is eligible for a substantial tax break.
- Holding businesses and private asset structures are eligible for special tax reduction in Liechtenstein.
Other important considerations
In Liechtenstein, the establishment of subsidiary companies follows a set procedure. In addition to the legal requirements, there are other important factors to take into account. As international business development involves initial funding, you should first consider your financial commitments.
Additionally, as your teams must align with the country’s high standards of efficiency and quality, you need to consider cultural work ethics.
How Multiplier’s Employer of Record can help you hire and expand in Liechtenstein?
In the long term, setting up of a subsidiary in Liechtenstein can result in skyrocketing profits and a chance to grow in the larger European market. You can also benefit from Liechtenstein’s great tax benefits and a qualified workforce.
It takes a lot of time to plan business development, let alone establishing one abroad. So why not enlist the aid of a third-party service provider like Multiplier to alleviate this obstacle to your business’s expansion?
Multiplier eliminates these obstacles, enabling you to engage both domestic and foreign workers without having to deal with complicated entity management:
- Fast onboarding: While your subsidiary registration is still being processed by the Commercial Register, you may quickly assemble your team by hiring and integrating foreign personnel in as little as one to three days.
- Compliant by design: Make sure all local employment contracts and tax withholdings adhere to legal requirements by automatically aligning with the most recent modifications to Liechtenstein’s corporation and labor rules.
- Local knowledge: Get access to HR specialists who can advise you on local management needs and guarantee that your international growth stays ahead of schedule and compliant at all times.
Book a demo with Multiplier today to seamlessly hire, manage compliance, and expand your team in Liechtenstein without setting up a local entity.
FAQs
Which subsidiary structure is most common in Liechtenstein?
Because of its low capital requirements, the GmbH (Limited Liability Company) is the most preferred option for overseas subsidiaries.
Can I recruit workers before registering my subsidiary?
Yes, while your company is still being founded, Multiplier may serve as your Employer of Record (EOR) for hiring and managing employees in Liechtenstein.
What is a Liechtenstein subsidiary's tax rate?
The attractive flat company tax rate of 12.5% is offered by Liechtenstein.
Does a Liechtenstein subsidiary need a local director?
Indeed, at least one approved managing director must be professionally qualified and a resident of Liechtenstein or an EEA state.
How do overseas subsidiaries' payroll systems operate?
To guarantee complete compliance, Multiplier oversees the complete payroll procedure, including local tax withholdings and social security (AHV) contributions.
Does the government support international expansion?
To make sure your expansion into Liechtenstein is successful and economical, Multiplier assists you in taking advantage of local tax breaks and labor laws.
