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Liechtenstein is one of the most alluring nations for international investors while being one of the smallest European republics. For several years in succession, credit rating agencies have given Liechtenstein favorable ratings; as a result, the Principality has excellent economic prospects. Foreign businesspeople also rely on laws encouraging investments. The fact that Liechtenstein joined a customs union with Switzerland and utilizes the Swiss franc as its official currency makes it unique.

Most industries are open to foreign investors in Liechtenstein

If you’re wondering why foreign investors would prefer Liechtenstein over its neighbors Switzerland and Austria, you should know that the government has made most industries accessible to foreign visitors. After Luxembourg, Liechtenstein is the second-largest financial hub in Europe. It also has the second-highest per-capita income in the world.

It differs from its European neighbors in that it generally welcomes small enterprises, which are also supported by the government at the national level. Many firms that are currently in operation throughout the world had their humble beginnings in Liechtenstein.

An attractive taxation system

The tax structure is another factor that attracts foreign investors to the nation. The small nation provides numerous additional advantages to foreign investors, including a maximum income tax rate of 20% and a sizable number of tax and investment agreements. Liechtenstein has one of the lowest corporation tax rates in all of Europe at 12.5%. Due to the lack of red tape, many foreign businesspeople are astounded by how quickly the company’s registration procedures go.

Like Switzerland, Liechtenstein is a member of the European Economic Area and as such is entitled to special treatment in its dealings with the EU.

Foreign investments 

Rating agencies have consistently given the country triple-A ratings because it has one of the most stable economies in all of Europe. Liechtenstein’s most recent AAA rating came from Standard and Poor in July 2017.

These grades, together with the country’s steady economy, encourage a lot of foreign investment, which attracts multinational corporations to locate their branch offices and subsidiaries here. Additionally, Liechtenstein has removed all barriers for people looking to establish businesses here and has opened up the majority of its industries to foreign investment.

Relies on one of Europe’s most robust financial sectors

Furthermore, Liechtenstein is one of the top nations in the world for establishing investment funds and insurance firms. Despite not being a member of the EU, Liechtenstein has negotiated several agreements that allow EU nations to establish enterprises in the investment funds industry in Liechtenstein.

Since changing its investment funds law in recent years, Liechtenstein today has one of the most cutting-edge infrastructures for establishing fintech enterprises like cryptocurrencies and crowdfunding ventures.

What makes it an attractive country for investors

The best incentives for attracting international investment are generally stable economies, and Liechtenstein provides just that. This country is far from becoming a tax haven despite having easy company formation processes but very stringent banking transaction restrictions.

To divert foreign investors’ attention away from the banking sector, the government has recently begun to spend more in sectors like research and development and innovative technology. Additionally, it is becoming more desirable for young entrepreneurs from nearby nations to establish IT, fintech, or e-commerce enterprises here.

Tax advantages for foreign investors

Liechtenstein will impose the same taxes on foreign investors as it does on domestic ones. Among these are an 8% VAT, one of Europe’s lowest corporate taxes at 12.5%, and extremely low withholding taxes. Furthermore, the VAT rate will be reduced to 7.7% in 2018. The double tax agreements that the country has signed allow foreign businesses with operations there to benefit from further lowered tax rates or exemptions. For instance, when remitting income earned in Liechtenstein to branch offices’ home countries, no taxes will be applied.