LiechtensteinChapters
The Principality of Liechtenstein was established within the Holy Roman Empire in 1719. Occupied by both French and Russian troops during the Napoleonic Wars, it became a sovereign state in 1806 and joined the German Confederation in 1815. Liechtenstein became fully independent in 1866 when the Confederation dissolved. 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. In 2000, shortcomings in banking regulatory oversight resulted in concerns about the use of financial institutions for money laundering. However, Liechtenstein implemented anti-money laundering legislation and a Mutual Legal Assistance Treaty with the US that went into effect in 2003.
Key indicators
- Area
- 160 km2
- Population
- 39,425 (July 2021 est.)
- Government type
- constitutional monarchy
- Languages
- German 91.5% (official) (Alemannic is the main dialect), Italian 1.5%, Turkish 1.3%, Portuguese 1.1%, other 4.6% (2015 est.)
- GDP
- $4.978 billion (2014 est.)
- Growth rate
- 1.8% (2012 est.)
- HDI
- 19
- Capital
- Vaduz
Macroeconomic indicators
Despite its small size and lack of natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial services sector and one of the highest per capita income levels in the world. The Liechtenstein economy is widely diversified with a large number of small and medium-sized businesses, particularly in the services sector. Low business taxes - a flat tax of 12.5% on income is applied - and easy incorporation rules have induced many holding companies to establish nominal offices in Liechtenstein, providing 30% of state revenues.
The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. It imports more than 90% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between the European Free Trade Association and the EU) since May 1995. The government is working to harmonize its economic policies with those of an integrated EU. As of 2015, 54% of Liechtenstein’s workforce consisted of cross-border commuters, largely from Austria, Germany, and Switzerland.
Since 2008, Liechtenstein has faced renewed international pressure - particularly from Germany and the US - to improve transparency in its banking and tax systems. In December 2008, Liechtenstein signed a Tax Information Exchange Agreement with the US. Upon Liechtenstein's conclusion of 12 bilateral information-sharing agreements, the OECD in October 2009 removed the principality from its "grey list" of countries that had yet to implement the organization's Model Tax Convention. By the end of 2010, Liechtenstein had signed 25 Tax Information Exchange Agreements or Double Tax Agreements. In 2011, Liechtenstein joined the Schengen area, which allows passport-free travel across 26 European countries. In 2015, Liechtenstein and the EU agreed to clamp down on tax fraud and evasion and in 2018 will start automatically exchanging information on the bank accounts of each other’s residents.
Relationships with Luxembourg
Existing conventions and agreements
Non double taxation agreement
In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.
- Convention from 16.08.2009 (Memorial 2010, A No.51, p.878)
- Effective as of 01.01.2011 (Memorial 2010, A No.51, p.878)
Air Services agreement
None
Further information
Foreign Trade
The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents.
You can see the statistics on the website of the Statec.
Contact points in Liechtenstein
Embassy of the Grand Duchy of Luxembourg in Liechtenstein
Ambassador with residence in Berne:
45, Kramgasse B.P.619
CH-3000 BERNE 8
Tel.: (+41-31) 311 47 32; (+41-31) 311 68 76; (+41-31) 312 00 95
Fax: (+41-31) 311 00 19
E-Mail: berne.amb@mae.etat.lu
Website: berne.mae.lu
Honorary Consul
Honorary Consul General with jurisdiction over the Principality of Liechtenstein
Mr Marcel MÜLLER
Plattenbach 30
9496 Balzers
Liechtenstein
Tel. +423 388 2303
E-Mail: vaduz@consul-hon.lu
Source: Ministry of Foreign Affairs of Luxembourg
Country risk as defined by Office du Ducroire for Liechtenstein
Ducroire is the only credit insurer covering open account deals in over 200 countries. A rating on a scale from 1 to 7 shows the intensity of the political risk. Category 1 comprises countries with the lowest political risk and category 7 countries with the highest. Macroeconomics experts also assess the repayment climate for all buyers in a country.
Link: ODL - Liechtenstein