Setting up a fund

EEA-compliant investment fund law
The Liechtenstein fund law has been modelled on the European investment fund law on account of its membership of the EEA. As European law has been incorporated into the EEA Agreement, the same rights and obligations apply in Liechtenstein as in all of the EU Member States. Accordingly, Liechtenstein enjoys full access to the European internal market and provides the highest degree of legal certainty for investors.

High investor protection
Liechtenstein has introduced stringent regulation to protect investors in the funds sector. Both the regulator and independent auditors scrutinise the activities of management companies and fund managers in the Principality on a regular basis.

Highly efficient banking system
The Liechtenstein investment fund market benefits from access to a highly efficient banking system. The banks of the Principality are amongst the best-capitalised in the world and did not require government assistance during financial crisis. A high proportion of the well-trained personnel in the local financial services industry comes from the neighbouring countries of Switzerland and Austria. The long-standing tradition of Liechtenstein’s financial centre and proximity to the Zürich stock exchange facilitate the recruitment of an outstandingly qualified work force.

Solid fiscal policy of public budgets
Liechtenstein has no national debt and is one of only 12 countries worldwide with an AAA rating from both Moody’s and Standard & Poor’s.

High level of political continuity and stability
Liechtenstein is a constitutional monarchy based on democratic parliamentary principles. The acting Head of State is H.S.H. Prince Alois von und zu Liechtenstein. The Principality has enjoyed the highest level of political, social, and economic stability over the past 300 years combined with a forward-looking, pro-business approach.

Customs and currency union with Switzerland
The use of the Swiss Franc in the Principality, which is recognised as one of the safest in the world, has provided considerable security for Liechtenstein and its investors since 1923. A Liechtenstein-domiciled fund however, would be in a position to use any other recognised currency for investment purposes as well.

Tax Conformity
For years, Liechtenstein has pursued a rigorous tax conformity strategy and has already concluded bilateral tax treaties with over 50 states around the world. The Global Forum on Transparency and Exchange of Information for Tax Purposes (OECD) gave Liechtenstein good grades within the context of its 2015 country assessments, judging that it was «largely compliant». This means Liechtenstein has the same rating as e.g. Germany and Great Britain.

Attractive tax system for investment funds
At the beginning of 2011, a totally revised Tax Act entered into force in Liechtenstein. The modern law is internationally compatible and complies with European Laws. Liechtenstein investment funds are subject to favourable tax rules and could be considered as tax-advantaged investment vehicles. They are for example, not subject to any domestic fiscal charges in the form of a capital tax or VAT. Nevertheless, the individual investor may incur a personal tax liability under the laws of the country of domicile.

This marketing communication is intended exclusively for information purposes and does not represent any offer, bid or invitation to purchase or sell securities, nor the advertising hereto. In any case you will need counselling of a specialist and most probably a tax ruling for clarifying individual cases.

EU compatible funds
Due to the Principality’s membership in the European Economic Area (EEA), EU regulations are fully integrated into Liechtenstein law and investment companies and fund promoters benefit from the access to the European market.

Short authorization period and time-to-market
The maximum authorization period for UCITS is laid down by legislation. It amounts to a maximum of 10 working days. Alternative Investment Funds (AIF) only have to be notified to the Financial Market Authority (FMA). Nevertheless, they are regulated and directly supervised. If the AIF is to be distributed, a distribution notification is required, which the FMA usually confirms within 4 to 5 working days (by law, a maximum of 20 working days).

Cost-efficiency
Setup costs, ongoing administration and supervisory fees are competitive in comparison with other fund domiciles. Since the application of an all-in fee is common practice, fund promoters profit from a high cost planning reliability.

Attractive tax system for investment funds
Revenues from investment funds are tax-exempt in Liechtenstein, and investment funds are not subject of VAT and stamp duty. Except of one special legal form, funds are free of governmental charges for emissions or incorporations.

Umbrella funds
Funds can be set up as so called umbrella funds comprising one or several compartments which also can be added subsequently. On this basis funds can be launched at a significantly lower cost.

Broad spectrum of investment vehicles
On the framework of European requirements the Liechtenstein fund centre enables a multitude of possibilities in setting up investment vehicles and enables a significant degree of flexibility in regard to investment strategies.

Efficient legislation
The fast and efficient integration of EU regulation with respect to the finance sector has led to a high degree of legal certainty with optimal conditions for financial intermediaries.

High investor protection
Liechtenstein has introduced stringent rules of conduct to protect investors in the funds sector. Both the regulator and independent auditors scrutinise the activities of management companies and fund managers in the Principality.

Highly efficient banking system
The investment fund market benefits from access to a highly efficient banking system. The banks of the Principality are amongst the best-capitalised in the world and did not need any government assistance during the financial crisis.

Transparent finance centre
Due to the implementation of extensive tax agreements and due to the participation in the automatic exchange of information as an early adopter, Liechtenstein has been recognised as a leading jurisdiction for investment funds.

High level of political continuity and stability
The Principality has enjoyed the highest level of political, social, and economic stability over the past 300 years combined with a forward-looking, pro-business approach.

Solid fiscal policy and liberal economic policy
Liechtenstein has no government debt and is one of only 11 countries worldwide with an AAA rating from Standard & Poor’s. The liberal attitude of Liechtenstein’s Government and its population is the reason for limited state intervention in the economy.

Customs and currency union with Switzerland
On account of its membership of the EEA and the customs and currency union with Switzerland, Liechtenstein is in a unique position to act as an economic crossroads between the two regions.

Long-standing tradition in the area of private label funds
Liechtenstein has a long-standing tradition in asset management and in the banking industry and a proven experience in the area of portfolio structuring.

If you are interested in setting up a fund under Liechtenstein law, we recommend to contact one of the providers directly.

This marketing communication is intended exclusively for information purposes and and cannot replace individual and detailed consulting.

In addition to the advantages mentioned in “Setting up a Fund – Why Liechtenstein?” there are further benefits for the establishment of a management company or an alternative investment fund manager (AIFM).

Attractive tax regulations
12.5% is the unified income tax for companies in Liechtenstein. The payment of this flat tax settles everything, as Liechtenstein knows neither tax on capital nor coupon tax. Also, distribution premiums or taxes on dividends, capital or liquidation profits on shares are not in place. The customs union with Switzerland also has certain tax effects. The joint value-added tax rate amounts to 7,7% and is thus by far the lowest rate in the European Economic Area (EEA). Liechtenstein based funds are in effect not taxed. Neither the fund is subject to any subscription taxes nor are distributions by the fund to its investors subject to any withholding taxes.

Excellent business environment
The liberal economic policy of the country is reflected in the labour law and in company law as well. Ancillary labour costs amount to 17% in the Principality, being one of the lowest values across Europe, although the working week is quite long in comparison. This contributes significantly to the attractiveness of this location as a company seat. The small size of the country brings with itself advantages in all instances: flexibility, limited bureaucracy and short decision routes. This holds true in particular for the work of the Financial Market Authority.

Outstanding productivity
Liechtenstein has a very high commuter rate. In order to adjust the statistics with respect to these commuters, not the per capita GDP is indicated but the GDP per professionally active person. It amounted to 193'820 CHF in the year 2017. With that, Liechtenstein is found among the top countries of the world.

Good network
Liechtenstein is a member of the EEA and thus profits from the internal EU/EEA market. Further organisations, to which the Principality belongs, are the UN, the EFTA and the WTO.

A high quality of life
Liechtenstein is situated in the heart of Europe: Surrounded by the mountains of the Alps and nestled in a region with a wide range of cultural and leisure opportunities. In the summer, keen mountain hikers find over 400 km of well-maintained and signposted hiking routes for every level of aptitude. In the winter, the family skiing region of Malbun attracts skiers and snowboarders onto the pistes. International centres such as e.g. Zurich, Milan and Munich, along with holiday resorts such as St. Moritz, Lech/Arlberg, the Lake Constance region with the Bregenz Festival, Tirol and South Tirol, Lago Maggiore, Lake Como, Lake Lugano and countless others can be reached from Liechtenstein quickly and with ease. Besides, Liechtenstein is one of the safest countries in Europe.
The infrastructure is well-developed, and there are excellent cross-border transport connections. The basic training and further education offer within the borders of Liechtenstein is very good, primarily thanks to the University of Liechtenstein, and is complemented by the comprehensive offering of the neighbouring countries.

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