Liechtenstein

The Principality of Liechtenstein was established within the Holy Roman Empire in 1719. It became a sovereign state in 1806. Until the end of World War I, it was closely tied to Austria, but the economic devastation caused by that conflict forced Liechtenstein to enter into a customs and monetary union with Switzerland. Since World War II (in which Liechtenstein remained neutral), the country's low taxes have spurred outstanding economic growth.

Like Switzerland, the Principality of Liechtenstein is politically neutral. It is closely tied to Switzerland with which it shares a currency. Banking and financial services comprise a large portion of the economy. Liechtenstein is an attractive international business center due to its combination of low taxation, liberal corporate statutes, and banking confidentiality.

Unlike its European neighbors, Liechtenstein is the only civil law country on the continent with a law on registered trusts. While Liechtenstein's trust law is based on Anglo-American jurisprudence, there are some characteristics unique to trusts established in the Principality. Most notably, Liechtenstein does not recognize rules against accumulations or perpetuities. Accordingly, it is possible to establish a perpetual trust. Liechtenstein does recognize choice of laws provisions allowing a trust to be administered according to the laws of another jurisdiction, such as that of the settlor's domicile. Regardless of which country's law applies to administration, the trust still enjoys the tax advantages of Liechtenstein domicile.

One of the most popular entities for wealth management is the Liechtenstein foundation (Stiftung). Although the foundation is not suitable for commercial purposes, it is a very effective tool for managing a family fortune or for charitable purposes. Liechtenstein foundations are not subject to any tax including income tax, capital gains, transfer tax, or estate tax in Liechtenstein. Liechtenstein foundations cost approximately USD 25,000 to establish and about USD 10,000 per year to maintain.

In addition to its attractive laws concerning trusts and foundations, Liechtenstein's corporate laws are extremely flexible. The principality allows for the creation of any form of legal organization that is recognized under the law of any jurisdiction worldwide. Common Liechtenstein companies include corporations (Aktiengesellschaft), private limited companies (Gesellschaft mit beshränkter Haftung), and establishments (Anstalt). The Anstalt is the preferred entity used by foreign companies to hold international subsidiaries. It is a hybrid between an AG and Foundation. It has no members or shareholders and may conduct most business activities with the notable exception of trading securities, which requires a special license.