Liechtenstein taxes are often overlooked when it comes to low or zero-tax jurisdictions with strong legal frameworks and a business-friendly environment, but it shouldn’t be.
This small Alpine principality offers some of the most attractive tax benefits in Europe, especially for high-net-worth individuals and entrepreneurs looking to optimize their international tax strategy. With options like lump-sum taxation, favorable treatment for foundations, and no capital gains tax for individuals, Liechtenstein combines low taxation with political stability and a high standard of living.
Liechtenstein isn’t just about low taxes, it’s about peace of mind. With a growing network of Double Tax Treaties, you can structure your international income in a way that avoids double taxation and keeps your assets working efficiently. It’s a place where wealth planning, legal clarity, and financial freedom come together, giving you the flexibility to live, invest, and grow globally, without the usual tax headaches.
At TaxMove, we help internationally-minded individuals take full advantage of Liechtenstein tax benefits — legally, strategically, and efficiently.
Tax Residency Rules in Liechtenstein
Individuals qualify as tax residents in Liechtenstein if they maintain a permanent home in the country or stay for more than 183 days within a tax year.
As tax residents, they are subject to worldwide income taxation, which is one of the core rules governing Liechtenstein taxes.
Liechtenstein Taxes
Liechtenstein has a simple and efficient tax system for individuals. This makes it attractive for people who want to manage their taxes easily. Here is an overview of individual tax rates, and how Taxation in Liechtenstein remains competitive on a global scale.
Overview of Individual Income Tax
Liechtenstein’s tax system is designed to be simple and efficient.
The country has low taxes on individuals. This makes it appealing to expatriates and high-net-worth people.
Residents are taxed on their worldwide income.
Non-residents are only taxed on Liechtenstein-source income.
Taxable Income Categories
Income subject to taxation includes:
Employment income (salaries and wages from work).
Business income (profits from self-employment or business activities).
Social security benefits (such as pensions and other allowances).
Pensions (retirement income)
Capital income (from movable and immovable property, calculated as a national income of 4% of net wealth).
Other sources (e.g., alimony, maintenance payments)
Personal Income Tax Rates
National Tax
Liechtenstein’s national tax system follows a progressive structure, ensuring fair taxation based on income and marital status.
The personal exemption is set at CHF 15,855 for single individuals, CHF 23,783 for single parents, and CHF 31,710 for married couples.
Tax rates begin at 1% for incomes up to CHF 21,140 for single taxpayers and gradually increase through various brackets, reaching 8% for incomes exceeding CHF 211,401.
Communal Tax
Communal tax is applied as a surcharge on the national income tax owed. Local municipalities set this surcharge annually, ranging between 150% and 180% of the national tax amount.
As a result, the total tax rate combines both national and communal taxes, leading to an overall tax rate that varies from 2.5% to 22.4%.
Wealth Tax
Wealth tax is incorporated into the income tax system.
The taxable net wealth is calculated by applying a standard rate of 4%, and the resulting amount is added to the taxable income. Both income tax and net wealth tax are assessed and collected by the Fiscal Authority in collaboration with municipal tax offices.
This integrated approach ensures a streamlined taxation process while maintaining compliance and efficiency in wealth taxation.
Inheritance and gift taxes
Inheritance and gift tax weres abolished in 2011.
Exempt Income
Certain types of income remain outside the scope of Liechtenstein taxes, such as:
Dividends and interest (if subject to net wealth tax).
Capital gains from shares and investments.
Social distributions and certain pension benefits.
Insurance payments for health and accident.
The Lump Sum Regime: A Path to Lower Taxes
There exists a lump sum tax regime for wealthy people moving there, which further lowers taxation in Liechtenstein for eligible residents. This tax structure works well for people with a lot of investment income. With this, they can keep their full earnings private.
How the Lump Sum Regime Works
Individuals in Liechtenstein pay a fixed amount based on their living expenses rather than worldwide income. This arrangement, negotiated with the tax authorities, often results in significant savings.
In Liechtenstein, the taxable amount for individuals opting for the lump-sum taxation system is calculated by multiplying their living costs by a flat tax rate of 25%.
According to the practices of the Liechtenstein tax administration, the lump-sum tax must be substantial; if it is deemed insufficient, the individual will be subject to the regular tax regime instead.
Lump Sum Regime Requirements
- Individuals are domiciled or reside in Liechtenstein but are not citizens of the country.
- They do not engage in any gainful activity within Liechtenstein.
- They rely on income from assets or other payments received from foreign sources.
Benefits of the Lump Sum Taxation
The following are the benefits of the Lump Sum taxation for individuals in Liechtenstein.
- No need to disclose global income.
No additional taxes are to be paid (including wealth tax).
Lower effective tax rate.
Simplified tax compliance.
Ideal for retirees and wealthy expatriates.
Liechtenstein Foundation for Asset Protection
A Liechtenstein foundation is a legal entity used for wealth management, inheritance planning, and tax optimization. These structures can also significantly minimize Liechtenstein taxes, especially for those managing large estates or cross-border assets. This makes them a popular choice for wealthy people.
Liechtenstein foundations also served as a model for the development of Private Interest Foundations in Panama, which adopted similar principles of asset protection, confidentiality, and succession planning.
Tax Treatment of Foundations
- A foundation is not subject to income tax on investment income.
- Foundations are typically taxed on their corporate income at a flat rate of 12.5%.
- The founder’s wealth is shielded from personal taxation.
- Contributions made to a foundation may qualify for exemptions.
How a Foundation Helps Cut Taxes
Assets held in a foundation are not part of an individual’s taxable estate.
Dividends and capital gains remain untaxed within the foundation.
Beneficiaries can receive tax-efficient distributions taxed at the regular rates, reducing overall taxation in Liechtenstein.
Double Tax Treaties and Anti-Avoidance Measures
The following are the tax treaties and anti-avoidance measures to reduce the individual tax burden in Liechtenstein:
Double Tax Treaties (DTTs)
Liechtenstein has in place more than 20 DTTs to prevent double taxation for individuals with international income. Key countries having DTTs with Liechtenstein include Germany, Austria, and Switzerland.
Anti-Avoidance Rules
While Liechtenstein offers tax advantages, it has introduced anti-avoidance regulations to ensure Liechtenstein tax system remain compliant with global standards:
Controlled Foreign Company (CFC) Rules: It prevents individuals from using offshore entities to evade taxation.
Exit Tax: Liechtenstein’s exit tax applies to unrealized capital gains on certain assets when individuals or businesses relocate abroad, ensuring taxation on wealth accumulated before departure.
Economic Substance Requirements: These requirements ensure that entities conducting business in Liechtenstein have a genuine presence and are not merely set up for tax advantages
How Can TaxMove Help You?
In our opinion, if structured well, Liechtenstein is one of our favorite jurisdictions for wealthy individuals, together with Malta, UAE, Panama and Cyprus.
At TaxMove, we help you legally reduce taxes while fully complying with Liechtenstein’s tax laws.
Whether you need support with individual taxes, lump sum taxation, or foundation setups, our experts guide you at every step to maximize savings and avoid risks while managing Liechtenstein taxes.
Submit the form to get tailored advice from our experts
What are the tax residency rules in Liechtenstein?
Individuals qualify as tax residents in Liechtenstein if they maintain a permanent home in the country or stay for more than 183 days within a tax year.
What are the personal income tax rates in Liechtenstein?
Tax rates range from 1% to 8%, with an additional 150%–180% communal tax surcharge, leading to an overall tax burden of 2.5% to 22.4%.
Does Liechtenstein have a wealth tax?
Yes, a 4% notional return on net wealth is added to taxable income.
What is the Liechtenstein Lump Sum Taxation system?
Non-citizens who do not work in Liechtenstein can negotiate a fixed tax based on living expenses, typically at 25%.
How are Liechtenstein foundations taxed?
Foundations pay a 12.5% flat corporate income tax but are not taxed on passive income, such as dividends and capital gains. They also shield assets from personal taxation.
Are there inheritance or gift taxes in Liechtenstein?
No, inheritance and gift taxes were abolished in 2011.
