Language: The official language is German, but English is also widely spoken.
Population: The population is approximately 30,000, and most people live in Vaduz.
Political System: In 1924, Liechtenstein conducted a customs treaty with Switzerland and has since then been part of the Customs Union and the corresponding economic territory of Switzerland. The national currency is the Swiss Franc. The banks, accounting firms and lawyers in Liechtenstein have a good reputation and a high degree of prestige worldwide. The country has the Swiss banking and telecommunication system at its disposal, because of its currency and postal connections with Switzerland. It has the same monetary, political and economic stability as Switzerland.
Legal System: The principality is a constitutional hereditary monarchy upon a democratic and parliamentary basis. The prince is the highest state authority and sanctions all law. Liechtenstein has a coalition government, but there are two independent political parties in the Parliament.
Taxation: Liechtenstein has no double-taxation agreements. The flexible company law and tax treatment of holding and domiciliary companies provide great advantages for asset management and protection for foreign investors.
In 1980, Liechtenstein enacted a major law change in order to control some of the abuses of its liberal system. The new law requires "inter alia," audited accounts from companies limited by shares and entities involved in commercial activities. It places additional responsibilities and qualification requirements on local directors. If the government suspects illegal financial sources, the companies are struck off the register. The government co-operates internationally regarding suspected criminal activities.
Incorporation: There are four types of companies that are commonly used: the Aktiengesellschaft (limited liability company), the Stiftung (the foundation), the Anstalt (the establishment) and the Trust.
Aktiengesellschaft: For a company to be entitled to tax benefits, it must be incorporated by a non-resident and may not carry out business in Liechtenstein.
Forming a Liechtenstein company for a client is based on trust; therefore, the client's name will not be registered with the Trade Register, and anonymity of the real founder is guaranteed.
The company must have an auditor, and audited accounts must be submitted to the revenue authorities for assessment of capital tax at 0.1%.
The minimum share capital is CHF 50,000, which must be fully paid up in registered or bearer shares.
Stiftung: This is a foundation that is endowed with assets by its founder for some specific purpose, e.g. for a family. The foundation can be formed by one or more individuals or legal entities. It is administered by a board in trust.
When the foundation is formed, it may receive further assets from anyone, but the original purpose remains unchanged. The capital must amount to at least CHF 30,000, and liability is restricted to the foundation.
There is also another company structure, the establishment organized as a Foundation, where the Board of Directors has the authority instead of the founder. Deed of Assignment (Zessionserklaerung) is not received by the customer.
Anstalt: This is a private law entity with its own legal status and predetermined capitalization that is the backing for the company's liabilities. An Anstalt can be used as a holding company for patents or royalties, for commercial purposes or for administering estates. At least one director is required, and if the company's objects are commercial, an auditor is required.
The minimum capital, which is normally not divided into shares or quotas, is CHF 30,000.
Trust: This is a legal entity similar to the Liechtenstein Establishment. Liechtenstein is the only continental country that has a trust law without prohibition on accumulation of proceeds or rules against perpetuity.
Summary: Following are some of the advantages of selecting Liechtenstein as an offshore financial center: