Value Added Tax
The value added tax is a consumption tax and it is levied on turnovers generated in Liechtenstein and on the import and/or supply of certain products and services. Due to the Customs Union between Switzerland and Liechtenstein, each of these countries are deemed to be national territory.
Just as in Switzerland, Liechtenstein’s standard value added tax rate of 7.7% is low. A special rate of 3.7% for accommodations is applied to accommodation services such as overnight stays with breakfast in hotels and health resorts and in other types of accommodation such as private accommodation, holiday homes, student dormitories, mountain lodges, camping sites, youth hostels, etc.
A reduced tax rate of 2.5% is levied on the following services and products:
- Turnover resulting from and import of tap water; foodstuffs and additives under the Swiss Foodstuffs Act; cattle, poultry and fish for consumption purposes; grains; seeds, planting roots and bulbs, living plants, cuttings, grafts and cut flowers and branches, including those used in arrangements, bouquets, wreaths and the like; animal feed, silage acids, grit for animals; fertilisers, pesticides, mulch and other vegetation used as covering material; medication; newspapers, magazines, books and other printed matter without advertising character of the kind to be determined by the Government;
- Services of radio and television companies, with the exception of commercials or other turnovers of a commercial nature;
- Turnover which is in fact exempt from the tax, but where the option for their taxation has been exercised;
- Soil cultivation supplies in the area of agriculture such as the ploughing, harrowing, seeding or harvesting of hay, grain, vegetables, fruits which directly precede the production of primary products taxable at the reduced rate which, in turn, are mainly intended for human nutrition or for use as feed and grit for animals.
All businesses, irrespective of their type of organisation, are subject to value added tax liability, as soon as they generate a turnover of more than CHF 100,000.00 per year. Businesses which meet the conditions of tax liability must register with the Liechtenstein Tax Administration of their own accord in writing within 30 days of them meeting the said conditions. For registration purposes, they must use the online desk (company based in Liechtenstein/Switzerland or Businesses based outside of Liechtenstein/Switzerland, German only). Businesses which do not reach the turnover threshold may voluntarily subject themselves to value added tax liability. For example, this can make sense if the majority of the activities carried out comprise exports or if supplies are made outside of Liechtenstein. For, no value added tax is invoiced for exports, but any input taxes paid can be asserted nonetheless.
e-MWST (German only) is a platform made available by the Liechtenstein Tax Administration in which businesses entered in the Value Added Tax Register can file their value added tax statements by electronic means, and, as a result, the filing of the statement by mail is no longer necessary. The portal is activated after successful registration of the business and after at least one agent is named at the same time who/which is authorised to file the statements by electronic means. The use of the platform is free of charge.
Exemption from Value Added Tax Liability
Any person that within one year generates turnover from taxable supplies of less than 100,000 francs is generally exempt from value added tax liability. The threshold for sporting associations, charitable institutions and cultural associations is 150,000 francs. If the business was entered in the Value Added Tax Register, it can apply for an exemption from tax liability, if the relevant turnover threshold is no longer reached. The Tax Administration must be informed in writing, failing which it is presumed that the exemption from tax liability is waived.
The turnover relevant for value added tax liability purposes includes any and all taxable supplies including supplies exempt from the tax. However, it does not include any supplies which are excluded from the tax (own use, subsidies, donations, contributions to businesses, ticket taxes, and the value added tax itself or the value of the plot of land, etc.).
The value added tax liability also does not concern any businesses whose registered office is located abroad and which exclusively make supplies in Liechtenstein which are subject to the what is called the acquisition tax. As a result of the import of goods or services to Liechtenstein, the foreign value added tax is not levied, thus rendering these products less expensive in Liechtenstein. In order to prevent a competitive advantage of the foreign businesses, the local value added tax rates are levied as acquisition tax. However, foreign providers of telecommunications and electronic services are in any case subject to the turnover threshold of 100,000.00 francs. Please note: Businesses which are not subject to value added tax liability become liable to taxation, if they procure services or supplies subject to acquisition tax for more than 10,000.00 francs in a calendar year:
- Services of businesses whose registered office is located abroad and which are not entered in the Register of Taxable Persons and where the supply is made in Liechtenstein
- The import of data storage media without market value with the services and rights included therein
- Supplies by businesses based abroad which are not entered in the Register of Taxable Persons where the supplies are not subject to import tax
For supply recipients that are not subject to value added tax liability, the tax liability is limited to the acquisition of the supplies mentioned above. They must be informed of their acquisition tax liability by the competent authority. Supply recipients that are already subject to value added tax liability must report any acquisition.
Statutory basis (German only)
Tax Act (Steuergesetz - SteG) of 23 September 2010
Value Added Tax Act (Mehrwertsteuergesetz - MWSTG) of 22 October
Value Added Tax Agreement of 12 July 2012 between the Principality of Liechtenstein and the Swiss Confederation (Mehrwertsteuervereinbarung vom 12. Juli 2012 zwischen dem Fürstentum Liechtenstein und der Schweizerischen Eidgenossenschaft)
Value Added Tax Ordinance (MWSTV) of 15 December 2009 relating to the Act on Value Added Tax (Mehrwertsteuerverordnung (MWSTV) vom 15. Dezember 2009 zum Gesetz über die Mehrwertsteuer)
Value Added Tax Treaty of 28 October 2009 between the Principality of Liechtenstein and the Swiss Confederation (Mehrwertsteuervertrag vom 28. Oktober 2009 zwischen dem Fürstentum Liechtenstein und der Schweizerischen Eidgenossenschaft)
Fact sheet on the registration of a company liable to value added tax