Citizens in Liechtenstein also have to pay taxes. Fiscal laws in the Principality are simple, internationally compatible and in line with European legislation. Individuals who are employees or are self-employed are subject to capital tax and income tax, with a progressive tax system used.
Fiscal laws in Liechtenstein are adapted to meet economic and legal conditions within the Principality and abroad. This ensures that Liechtenstein continues to have an attractive and competitive taxation system now and in the future. One of the main concepts behind fiscal laws in the country is to maintan "decison neutrality", meaning that taxes should not be affected by decisions made on investments, financing, legal and organisational forms and the use of capital gained. Tax laws are simple, transparent and internationally compatible.
Natural persons resident in Liechtenstein are subject to capital tax and income tax. There is also a state tax and a municipal tax that varies according to the person's place of residence. The national tax comprises eight tax bands with a maximum of 8%. The municipal tax is based on the amount of national tax paid and lies between 150% and 250% of this national tax. Within these boundaries municipalities decide every year on the amount of municipal tax to levy.
Employees have their income tax automatically deducted and transferred to the tax authority. A tax declaration must be completed and submitted every year. This is then used to calculate the amount of tax that should have been paid in the previous year.