Effective Tax Rate on Rental Income
|Click here to see a worked example|
|Source: Fiduciana Disclaimer|
Nonresidents are taxed on their income from Liechtenstein sources. Liechtenstein asset and income tax law is governed by the principle of family taxation, which means that married couples are assessed and taxed jointly.
Taxes are assessed on the basis of taxable assets and taxable income. The tax rate is determined annually by Parliament in fractions or multiples of the legal tax unit (0.1% for taxable assets, 2% for taxable earnings); it is currently 54% of the legal tax unit.
Tax progression surcharges of 5% to 425% are added to the simple national tax, i.e., the amount of asset and income tax calculated on the basis of the tax rates mentioned above, depending on the amount of the tax. Municipalities add additional surcharges of at most 200% to the overall national tax liability.
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.
Gains or profits realized from the sale of Liechtenstein property are subject to a special tax called real estate profits tax. Taxable gains or profits are computed by deducting the investment costs (acquisition costs and improvement costs) from the sales proceeds. An allowance of CHF1,500 (€1,246) may also be deducted.
Gains or profits are then taxed at progressive rates. Different sets of progressive rates apply, depending on the seller’s ownership period before he sold the property.
The basic tax rate is the same basic rate that is fixed annually by the parliament for income tax. That rate is increased, depending on the holding period, by one third (holding period of 5 to 10 years), two thirds (holding period of 3 to 5 years) or 100% (holding period of less than 3 years). The amount so calculated is increased by the progressive surcharge ranging from 5% to 425% and furthermore by a standard surcharge of 200% (instead of the varying municipal surcharge).
REAL ESTATE PROFITS TAX
|Up to 3 years|
|3 years – 5 years|
|5 years – 10 years|
|Over 10 years|
The net worth tax is levied on the net worth of the taxpayer’s assets. Liabilities are deducted when computing for the tax base. Net worth up to CHF20,000 (€16,609) are tax-exempt, the tax threshold becomes CHF30,000 (€24,913) if no income is reported. The remaining balance is then taxed at progressive rates, with a maximum rate of about 0.9% (depending on the commune) on net worth exceeding CHF350,000 (€290,649).
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