CLOSE X

Register - if you don't have an account

Yes! Sign me up for Global Property Guide's fortnightly email newsletter.


Login - for registered users

Forgot Password?
Explore destinations
continent map couldn't be loaded Pacific Europe & Russia North America Latin America Asia Africa Middle East Caribbean

 


Financial Overview

Directory

Property Search

Global Statistics

Regional Statistics






Last Updated: Jul 26, 2014

Liechtenstein: foreign homeownership very restricted



Properties in the Principality of Liechtenstein, one of the smallest countries in the world, landlocked between Switzerland and Austria, are expensive and highly restrictive to foreign nationals.

Properties of different sizes can be rented around US$ 2,240 to US$ 5,340, while properties can be bought around US$640,000 to US$4,040,000.

Rents can be freely negotiated between landlord and the tenant, but with civil code provisions disallowing disproportionate increase in rental prices.

The purchase of real estate by foreigners is strictly regulated. Buying property requires 3 years residency first. The European Community has given Liechtenstein the freedom to restrict entrance due to its small size.  Currently Liechtenstein allows in 28 EU nationals every year without working permits, excluding multinational employees who can take up residence as long as they have a work permit. This quota system applies to nationals of all European countries, including Norway and Iceland since joining the European Economic Area in May 1995.

House prices in Liechtenstein usually increase by around 4% to 5% per year, according to Property World. In Vaduz, the capital, a three-bedroom luxury house was priced CHF3.6 million (€2,963,813). In Schaan, the largest community in Liechtenstein, a two-bedroom luxury house was priced CHF3.5 million (€2,881,428).

There were about 15,474 occupied dwelling in Liechtenstein in 2010, up by 22.8% from 2000, based on the figures in the 2010 housing census. Of these more than 50% were owner-occupied while the remaining housing units were rented.

Interest rates are low. Effective February 2014, the average interest rate for variable-rate mortgages stood at 2.25% for the 1st mortgage and 3.25% for the 2nd mortgage, according to the Liechtensteinische Landesbank, the central bank of Liechtenstein. On the other hand, effective July 28, 2014, the average interest rate for fixed-rate mortgages was 1.1% (for duration of 2 to 3 years), 1.2% (4 years), and 1.3% (5 years).

After contracting by 3.1% in 2011 and 0.1% in 2012, the economy bounced back in 2013, with a moderate real GDP growth rate of by 2.1%, mainly due to a robust growth in the financial services sector, according to Universität Liechtenstein. Real GDP growth rate is expected at 2.2% this year.




RENTAL YIELDS
Last Updated: Jun 09, 2005



Yields on residential property in Liechtenstein, on average, are low at 3%, according to the Global Property Guide’s research. Yields on properties in the capital of Vaduz are similar to those in the suburbs, ranging from 2.2% to 3.4%.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Mar 17, 2014



Rental Income: Income tax is levied at progressive rates. The actual applicable tax rates depend on the level of taxable income and the particular commune in which the taxpayer resides.

Assuming a municipal tax surcharge of 200%, the minimum and maximum tax rates are as follows: at least 0.162% and at most 0.8505% for asset tax; at least 3.24% and at most 17.01% for income tax.

Capital Gains: Capital gains are taxed in Liechtenstein progressive rates. Different sets of progressive rates apply, depending on the seller’s ownership period before he sold the property.

Liechtenstein Vaduz hillside luxury houseInheritance: There are two different forms of tax on inheritance: the estate tax (levied on the estate) and the inheritance tax (levied on the beneficiary’s inheritance). Both taxes are levied at progressive rates and different sets of progressive rates apply, depending on the family relationship between the benefactor and the beneficiary as well as the value of the estate and inheritance.

Residents: Income tax is complex, but not onerous, depending on the level of taxable income and the particular commune in which the taxpayer resides.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Mar 18, 2014



Total transaction costs amount to 4% of the selling price. The buyer pays 0.9% notary fees. The agent’s fee of 3% is paid by the seller.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Dec 02, 2007



Rents: The contracting parties are free to negotiate the initial rent.

Tenant Security: There are three types of rental contract: indefinite contract, six months’ contract, and freely negotiated contract (always for a fixed period).

Six months’ notice is required on either side to terminate an indefinite contract. It is customary to give 2-3 month’s notice to terminate a fixed period contract.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Jul 26, 2014


Liechtenstein’s modest economic growth

Liechtenstein luxurious apartmentsLiechtenstein is the sixth smallest country in the world, but one of the richest, with a GDP per capita of US$156,638 in 2013, according to Standard & Poor’s. It has a total population of about 36,800 people. About 33.5% of them are foreign nationals, mainly from Switzerland, Austria and Germany.

Liechtenstein is closely linked to its neighboring Switzerland culturally, politically and economically.

After contracting by 3.1% in 2011 and 0.1% in 2012, the economy bounced back in 2013, with a moderate real GDP growth rate of by 2.1%, mainly due to a robust growth in the financial services sector, according to Universität Liechtenstein. Real GDP growth rate is expected at 2.2% this year.

Financial services are a major portion of Liechtenstein’s economy. The 1923 Customs Treaty with Switzerland and the introduction of the Swiss franc as official currency became the foundation for the evolution of the financial centre.  In fact, the financial sector comprises about 33% of its GDP and generates about 40% of the State revenue.   In 2000, Liechtenstein was criticized for lax financial controls. Stung by the criticism, it implemented anti-money laundering laws.

Liechtenstein is a centre for incorporating fund management companies, because of low business taxes (maximum rate of 20%). About 75,000 so-called ‘letter box’ companies have nominal offices in Lichtenstein, exceeding its official population figures. These companies provide about 30% of Lichtenstein’s revenue.

In May 2014, Liechtenstein signed the Foreign Account Tax Compliance Act (FATCA) with the US, an act that requires banks outside US to share data on accounts held by US taxpayers; otherwise, a withholding tax of as much as 30% will be imposed. According to Simon Tribelhorn, director of the Liechtenstein Bankers Association, an 18-month timetable is needed for completing the automatic exchange accords between nations who signed the FATCA.

In addition, last November 2013, Liechtenstein signed onto an Organization for Economic Cooperation and Development (OECD) standard pledging to take bilateral treaties for automatic exchange of bank data. The country was said to first seek agreements with Germany, France, UK, Italy and Spain.

The impact of these steps has been felt by the banking industry. According to Mario Gassner, chief executive officer of Liechtenstein’s Financial Market Authority, “In the past, clients came to Liechtenstein to bring their money. Since 2008, our financial intermediaries have had to go to the clients.”

The nation’s trust business amounts to 70% of the country’s financial services industry’s revenues, which according to Clemens Laternser, managing director of the Liechtenstein Association of Professional Trustees, shrunk by 30-35% since 2008.

However, the country’s competitive tax rates and sound labor regulations also promote dynamic business activity, according to the 2011 Index of Economic Freedom.

Low taxes in Liechtenstein have spurred outstanding economic growth since World War I. Contrary to popular belief, Liechtenstein has a broadly diversified economic structure with a significant emphasis on industrial production. Despite the small size of the country (160 sq. km.) and a small population, the economy produces many high quality high-tech products. In fact, while the financial services sector is indeed one of the largest contributors to Liechtenstein’s GDP (27%), its contribution is exceeded by manufacturing (37%) and the general services (28%) sectors.

Although Liechtenstein is not yet part of the EU, it is a member of the EEA (since May 1995) which allows free trade of goods in the EU.

Unemployment is very low. Liechtenstein has almost the same number of jobs as the inhabitants. This means that the unemployment rate is very low. Since 2006, the country’s unemployment rate has fluctuated from 2.2% to 3.3%.

Currently, a total of 36,284 people are employed either in full- or in part-time positions in Liechtenstein, according to Universität Liechtenstein. In 2013, full-time equivalent (FTE) employment increased by 1% to 31,303 from a year earlier. The level of FTE employment is expected to continue to increase by 1.5% this year.

In March 2014, Standard & Poor’s Ratings Services affirmed its AAA/A-1+ long- and short-term sovereign credit ratings on Liechtenstein, on the back of the principality’s outstandingly high wealth levels, debt-free public accounts, consensus-based prudent financial policies, and improving public finances.

After the adoption of the Swiss Franc (CHF) as the country’s national currency, inflation has been kept low and stable, and was 1.6% in 2000. In 2012, there was a negative inflation of 0.7%.

Some must-see attractions in Liechtenstein range from beautiful landscapes to museums, restaurants, and sporting events such as the Vaduz Castle, Centre of Vaduz, Liechtenstein Museum of Fine Arts, Liechtenstein National Museum, Princes' Way Hike, Malbun, Eagle Hike, Prince of Liechtenstein Winery, Gutenberg Castle, Ruggeller Riet Nature Reserve, Grossabünt Outdoor Leisure Centre, and Historical Eschnerberg Trail.

It was in March 2003 when a constitutional referendum gave Prince Hans-Adam sweeping new political powers, such as the power to hire and fire the government, making Liechtenstein Europe’s only absolute monarchy.

In August 2004, Hereditary Prince Alois assumed the office vacated by Prince Hans-Adam II who, although he could remain head of state, decided to withdrew from active political duties.







  • Low transaction costs
  • Pro-landlord rental market
  • Limited ownership for aliens
  • Generally low yields
RESIDENTIAL PROPERTY FACTS
Price (sq.m): n.a. For a 120 sq. m. property, usually an apartment.
Rental Yield: n.a. For a 120 sq. m. property, usually an apartment.
Rent/month: n.a. For a 120 sq. m. property.
Income Tax: n.a. Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 3.90% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

Baltic property back! Q1 2014 - NewsecBaltic States Capitals 2014 - Ober HausScandinavia Property Report Q4 2014 - Newsec



Free Newsletter

Fortnightly updates from the global property arena directly to your inbox.


Email Address:





Connect to professional advice in Liechtenstein





PROPERTY RECOMMENDATIONS

 
Download free Global Property Guide reports

Our Newsletter

 
Fortnightly updates from the global property arena directly to your inbox.

Manage subscriptions
Chinese property buyers and Asian buyers, there is great property for high net worth Chinese buyers on Juwai.com

Which parts of the world are most attractive for property investment today?

Click here to download our FREE Property Recommendations Reports!

Close Me