Does the Liechtenstein foundation enable efficient asset accumulation?
The tax burden on the income generated from the assets is of essential importance for the effective accumulation of assets. The current taxation of the Liechtenstein foundation is therefore examined below.
This taxation of the Liechtenstein foundation is governed by the provisions of the Liechtenstein Tax Act (SteG). A Liechtenstein non-transparent foundation is subject to income tax on its taxable net income in accordance with Art. 44 para. 1 in conjunction with Art. 61 SteG. Art. 61 SteG, its taxable net income is subject to income tax. Under Liechtenstein law, the foundation is deemed to be non-transparent for tax purposes pursuant to Art. 9 (3) and (4) SteG if the founder has not reserved the right of revocation pursuant to Art. 552 § 30 (1) of the Liechtenstein Persons and Companies Act (PGR).
In accordance with Art. 44ff. SteG, legal entities that have their registered office or place of effective management in Liechtenstein are generally subject to unlimited income tax at a rate of 12.5%. However, the minimum tax liability is CHF 1,800. This tax liability generally begins when the Liechtenstein foundation is established, but can also arise if the registered office is relocated to Liechtenstein or if the actual place of administration is in Liechtenstein. It should be noted that charitable foundations can be exempted from this tax liability upon application.
The unlimited income tax liability covers all of the foundation's income. However, certain income is excluded from net income by the provisions of Liechtenstein tax law, in particular Art. 48 SteG. This includes income from the letting and leasing of foreign properties as well as capital gains from these properties.
In these cases, the foundation is subject to limited tax liability in the country of domicile for this income. The same applies to profits from foreign permanent establishments. Dividends and profits from investments in corporations are also not included in taxable net income.
A special feature of Liechtenstein tax law is the so-called equity interest deduction. Here, 4% of the modified equity is deducted as a business-related expense. The modified equity includes both domestic and foreign assets of the Liechtenstein foundation. However, participations in legal entities and foreign real estate are excluded from the equity capital.
Conclusion:
The Liechtenstein tax system not only offers low tax rates, but also attractive special features such as the exemption of certain income and the equity interest deduction. These advantages enable you, through the Liechtenstein foundation, not "only" to protect your assets in the face of global change, but also to effectively increase your assets.