Liechtenstein Crypto Tax

Liechtenstein is considered one of the financial centers in Europe. This small country, nestled comfortably between Switzerland and Austria, is a stable economy and has a strong public sector, combined which creates a very favorable business environment for international businesses. The advantages are also reflected in the purely practical part of the business: the procedure for registering companies is so simple and fast that in just a few working days, one can set up a fully incorporated company. This makes Liechtenstein an attractive factor for foreign investors and is combined with the fact that Liechtenstein is a member of the EEA.

In principle, in Liechtenstein, the tax year is the business year. The tax return is due on 1 July of the subsequent calendar year (for example, for 2023 it will be 1 July 2024).

The Principality of Liechtenstein has concluded or signed, in principle, double taxation agreements with a total of 24 countries. This number is increasing steadily.

The double taxation treaties enable you to take advantage of the preferential tax rate or tax exemption. For this purpose, you have to provide a certificate of residence which proves the locality of the taxpayer’s seat for tax purposes.

Corporate Income Tax

The net profits of resident companies in Liechtenstein are taxable at a flat rate of 12.5%. Additionally, a minimum fee of 1,200 Swiss francs is payable with regard to companies whose annual revenue is at a moderate level.

It is also charged on non-resident companies. A non-resident company is also obliged to pay the entire tax in full for the entire tax period with no options of appealing. Excluded are the companies whose revenues do not exceed CHF 500,000 for three successive years.

Corporate income tax also encompasses intangibles, since no special rules would imply the different treatment of such income. However, under the arm’s-length rule, the tax authority could tax the local entity which created the intangible, and allocate the respective royalty fee to its earnings.

Value Added Tax

On the other hand, crypto companies are compelled by law to apply for VAT registration before commencing their economic activities in Liechtenstein. It follows then that the filing of the VAT report is quarterly, that is, every 3 months.

The usual VAT rate in Liechtenstein is 8%. It is among the lowest rates in Europe.

Social security contributions

If your crypto company is considering hiring staff, you will have to consider Social Security Contributions, regardless of the specifics of your activities. As in most countries, in Liechtenstein, the contributions are levied to pay for such categories as pension, disability, and sickness benefits, maternity leave, and insurance against injuries at work. Payments are shared by employers and employees on a monthly basis.

Generally speaking, in Liechtenstein, the employer pays a higher proportion of the contributions levied for social-security purposes than the employee. Contributions are levied as a fixed percentage of salary. Each type of social security contribution has its own rate, divided between employer and employee, sometimes equally, sometimes with the employer paying a higher share, even the full amount for certain cases.

If the employee comes within the ambit of the Liechtenstein social security system, the following statutory social security contributions are payable:

• The general contribution rate for old age, survivors’, and disability insurance is 9.6%, of which the employer bears 4.9%.
• The family compensation fund has an employer fully paid contribution rate of 1.9%.
• Unemployment insurance/supplementary unemployment insurance. The general tax rate for this category is 1%, equally divided by the two parties.
• Occupational accident insurance at a rate of 0.1%, fully employer-financed.
• Occupational pension scheme, 2nd pillar: The tax rate entirely depends on the selected pension plan chosen by the employee. It is divided in equal shares between the employer and the employee.

Tax credits and incentives

Liechtenstein has a very strong support system for businesses, with favorable conditions when financial losses occur. In particular, there is the possibility of carrying forward losses against income for an unlimited period after the loss year. The offset is limited to 70% of the taxable income of the respective financial year, while the rest of the losses carried forward can be used in the next years.

How do I pay taxes in Liechtenstein on crypto in 2024?

Due to the progressive approach to the regulation of digital assets, in 2024 Liechtenstein is reinforcing its position as one of the most interesting and innovative financial centres for investment and business in cryptocurrency. The Liechtenstein authorities, together with the local tax authorities, have provided clear and understandable rules for taxing cryptocurrency income and have thus created a favorable environment for this market to grow and develop.

Taxation of cryptocurrency in Liechtenstein

Liechtenstein is among those countries which, from a legal point of view, treat cryptocurrencies and tokens as private assets; hence, gains from speculation in cryptocurrencies or an investment in cryptocurrencies are subject to paying their fair share of taxes. Currently, the tax policy of the state is focused on the encouragement of innovation and investments in the digital asset sector, taking into consideration the principles of fair taxation.

Declaration of Income from Cryptocurrencies

All individuals who derive income from any cryptocurrency transaction are required to declare the same as income on their tax return. Income includes, but is not limited to, the following: capital gains upon sale of the cryptocurrencies, mining, staking, or any other income received as part of cryptocurrency dealings.

Capital gains tax

Gains realized from the sale of cryptocurrencies above the original purchase price are subject to capital gains tax. The capital gains tax rate in Liechtenstein is competitive and is levied on the investor’s total profit.

Tax benefits

Liechtenstein offers certain tax incentives for cryptocurrency investors and businesses, including preferential conditions for start-ups and technology companies, which make optimization of tax liabilities possible by proper planning and structuring of activities.

VAT and other taxes

Generally speaking, Liechtenstein does not impose VAT on cryptocurrency deals; therefore, this makes it an even more friendly environment in which to establish a crypto business. Still, some services dealing with cryptocurrencies can be subject to the charging of VAT according to general rules.

Through progressive tax laws and openness to innovations, Liechtenstein remains one of the most highly recognized financial centers for investments in cryptocurrency. Careful tax planning by investors and entrepreneurs in cryptocurrency should be done with the use of given opportunities for tax optimization in the Principality. With Liechtenstein’s strong focus on transparency and adherence to international standards, this means an enabling environment for growth within this sector.

Table of key tax rates in Liechtenstein

These rates reflect Liechtenstein’s tax policy aimed at attracting businesses and investors and maintaining a competitive and fair tax environment. With low tax rates and a progressive approach to regulating cryptocurrencies, Liechtenstein is an attractive jurisdiction for financial innovation and the development of the digital economy.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations.