Liechtenstein Itself – An Introduction
The miniscule country of Liechtenstein is located next to its neighbour Switzerland, with Austria to the east. When people think of Liechtenstein, most people picture a kind of fairy-tale city, small in scope and vast in wealth. Its snowy mountain scenery and picturesque medieval style castles make it akin to a set straight out of a Disney movie. This vision is not far from reality – this is the perfect destination for high net worth investors seeking a quiet, safe and luxurious place to comfortably settle down.
The fourth smallest state in Europe, it was born as a result of a union between the previous County of Vaduz (1712) and the lands of Schellenberg by the Princes of Liechtenstein. Although small, it is also one of the wealthiest states in terms of GDP per capita, only beaten by Qatar and Luxembourg. Despite the vast riches of its citizens, Lichtenstein actually has more companies registered under its province than it does citizens! A large portion of the rationale behind setting up a business in Lichtenstein is due to its very low business taxes. With a corporate tax rate of 12.5%, the only other country in Europe who can boast lower rates is Andorra with a 10% maximum tax rate. Its Rules of Incorporation which are required to start a business are also easier to meet than most other countries. These factors partly result in Liechtenstein being a fantastic location in which to start and maintain a business.
Liechtenstein’s reputation as a haven for wealthy investors was not always secure. In fact, following the end of the war in Europe, it was forced to sell many of its national treasures in order to survive financially, including a portrait drawn by Leonardo Da Vinci which was purchased by an organisation in America for 5 million USD, then a record amount for such a painting. In order to escape these poor financial straits, the country lowered its corporation tax rates in the 1970s. This led to a large number of companies incorporating there, and as a result the country became one of the wealthiest in the world, enjoying one of the highest standards of living.
Outside investment in Lichtenstein’s growing economy saw it develop a successful, highly industrialised free-enterprise economy. In terms of industry involvement, a large sector that brings in revenue is ceramics. In fact, Liechtenstein has the strange title of being the world’s most prominent provider of false teeth! Other industries include electronics, textiles, precision instruments, metal manufacturing, power tools, anchor bolts, calculators, pharmaceuticals, and food products. It’s most recognisable international company and largest employer is Hilti, a manufacturer of direct fastening systems and other high-end power tools. Liechtenstein produces wheat, barley, corn, potatoes, dairy products, livestock, and wine. Tourism accounts for a large portion of the country’s economy. It has been a member of the European Economic Area (an organisation serving as a bridge between the European Free Trade Association (EFTA) and the European Union) since May 1995.
Culturally, as Liechtenstein is small, it has adopted much of the cultural traits of the neighbours who surround it, such as Austria, Baden-Wurttemberg, Bavaria, Switzerland, and specifically Tirol and Vorarlberg. The “Historical Society of the Principality of Liechtenstein” plays a role in preserving the culture and history of the country. In order to redeem the prior situation in which the country was forced to sell much of its fine arts in order to prosper, it now is home to the Private Art Collection of the Prince of Liechtenstein, which can be found at the Liechtenstein museum in Vienna, and holds claim to being the world’s leading private art collections.
A country of peace, Liechtenstein has no military as it is one of the only countries in the world which operates under the principle of neutrality. In fact, the last surviving soldier of the army of Liechtenstein died in 1939 at age 95; the demise of the German confederation meant that the country could disband the small 80 man army it once had and its Parliament took the opportunity to refuse to provide funding for a new replacement army. The Liechtenstein National Police force totals 125 employees and even then these people have little to do as the country boasts one of the lowest crime rates globally.
Liechtenstein is the perfect location or investors seeking a calm, peaceful, prosperous country to do business with. The comparatively flexible rules of incorporation and low corporate tax rates make it a haven for business owners and start-ups and its picturesque snow coated landscape is not too hard on the eyes either. With a high standard of living quality and low crime rates, Liechtenstein is a safe and secure investment for any HNWI looking to live a stable life with all of the luxuries that come with it.