Tightening of tax rules for Liechtenstein companies planned

In connection with developments concerning the EU Code of Conduct, Liechtenstein is planning significant amendments to the Tax Act with effect from 1 January 2019. The most relevant amendments can be summarized as follows:

  • Tax exemption on income from participations for low-taxed participations with passive income will be abolished
  • Tax exemption of capital gains will be abolished for participations whose distributions are no longer tax-free
  • Tax deductibility of losses on participations is abolished
  • The anti-abuse provisions for notional interest deduction on equity are extended

Companies subject to tax in Liechtenstein are urgently recommended to clarify the implications of these changes and to consider possible measures in the business year 2018, with a view to the entry into effect from January 1, 2019.