Inheritance tax and inheritance law in Liechtenstein
Taxation Researcher | March 10, 2022
The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Liechtenstein: what restrictions there are and whether making a will is advisable.
How high are inheritance taxes in Liechtenstein?
TAXES ON INHERITANCE
The inheritance taxes and gift taxes were abolished in Liechtenstein as of 01 January 2011.
Estates due in Liechtenstein are subject to estate tax. Estates are considered due in Liechtenstein if the temporary or permanent residence of the deceased was in Liechtenstein at the time of death or if the estate consists of real property in Liechtenstein. Estate tax liability rests with the successors.
The estate tax is levied at progressive rates.
|TAX BASE, CHF (€)|
|Up to 200,000 (€163,934)|
|200,000 - 600,000 (€491,803)|
|600,000 - 1,200,000 (€983,606)|
|1,200,000 - 2,000,000 (€1,639,344)|
|Over 2,000,000 (€1,639,344)|
If the estate is left to the spouse, children, or parents of the deceased, the applicable tax rate is only half of the general rate.A tax allowance of CHF10,000 (€8,197) is granted to the decedent´s spouse and descendants.
The acquisition of assets in Liechtenstein due to death of a benefactor is subject to inheritance tax. Assets are considered acquired in Liechtenstein if the assets constitute real property in Liechtenstein or moveable assets left by a deceased whose temporary or permanent residence was in Liechtenstein at the time of death.
The inheritors must pay tax at progressive rates. The applicable tax rates depend on the family relationship between the deceased and the recipient and on the value of the recipient´s inheritance. There are several categories of inheritors:
- Category I: children, grandchildren, parents, spouses
- Category II: grandparents, siblings
- Category III: parents-in-law, half-children, nieces, nephews
- Category IV: uncles, aunts
- Category V: other people related by blood or marriage
- Category VI: others
|TAX RATES FOR DIFFERENT CATEGORIES|
|TAX BASE, CHF (€)|
|Up to 20,000 (€16,393)|
|20,000 - 70,000 (€57,377)|
|70,000 - 170,000 (€139,344)|
|170,000 - 370,000 (€303,279)|
|370,000 - 770,000 (€631,148)|
|770,000 - 1,520,000 (€1,245,902)|
A tax allowance of CHF10,000 (€8,197) is granted to the decedent´s spouse and descendants.
Thanks to Ritter & Wohlwend
What inheritance laws apply in Liechtenstein?
The applicable inheritance laws depend on the decedent´s nationality.
The principal laws in Liechtenstein applying to inheritance issues are the Civil Code (ABGB), the Jurisdiction Act (JA) and the IPLA. Religion is not a criterion in any respect of Liechtenstein civil law.
If a non-resident foreign decedent owns property in Liechtenstein, then the International Private Law Act (IPLA) applies. Article 29 IPLA primarily states that the applicable inheritance law depends on the decedent´s nationality. The nationality of the deceased is relevant in most cases, but is possible for a foreign decedent to choose an inheritance law other than his/her national law.
If spouses have different nationalities, the national law of the deceased is applicable from a Liechtenstein point of view. According to Article 20 IPLA on the application of matrimonial regimes, the applicable law is that of the country where the partners had their official residence at the time of their marriage, or the law of the country where the partners lived when they married. A choice of law by the spouses is also respected by Liechtenstein law.
If the foreigners´ national law refers inheritance issues back to the Liechtenstein jurisdiction, then the regulations of Liechtenstein law, including "forced heirship", are applied (Article 5 IPLA).
According to § 56 JA the Liechtenstein court is responsible for inheritance issues concerning property in Liechtenstein which is owned by a foreign decedent. The Princely Court of Justice is competent to process inheritance issues, and decisions about non-resident foreigners´ property are made primarily in this court. Inheritance cases typically take between three and six months.
Liechtenstein inheritance law includes "forced heirship".
In cases where the laws of the decedent´s nationality do not apply, then the Liechtenstein rules of succession are as follows:
- The testator must respect forced heirship rules, which include an obligation to reserve a certain quota of an estate to his/her children and spouse, or in the absence of children, to his/her spouse and parents.
- The reserved portion for children and spouses is equal to one-half of the intestate share (see below).
- The residue of the property can be freely willed.
- Disinheritance of children is only permitted in one of the following cases: not supporting the testator in case of need; crime punished with 20 or more years in jail, or leading life against public morals.
According to Liechtenstein law, in the absence of a will, the entire estate is divided between the intestate heirs in order of succession as follows:
- Spouse and descendants of deceased, if any;
- Parents and brothers and sisters;
- Grandparents and their issue;
- Great-grandparents only.
The surviving spouse takes one-third. The rest is divided in equal shares between the children. If there are no children, the spouse receives two-thirds. The rest is divided between parents, brothers and sisters.
Divorce cancels the intestate right of the surviving spouse. If there is no next of kin the estate devolves to the State.
It is usual to formally make a will in Liechtenstein.
It is not necessary for a foreigner who owns property in Liechtenstein to make a local will, because the Liechtenstein judge usually applies foreign law.
If a foreigner wants to make a local will, his presence in Liechtenstein is not required. A holograph will can be written by the testator in his/her own hand writing. A typed will signed by the testator requires three witnesses.
Property cannot be disposed of freely by the owner before death.
Gifts made during the lifetime of the decedent are taken into consideration when summing up the worth of an estate. Gifts made to persons not entitled to the reserved portion earlier than two years before the death can be challenged by persons entitled to the reserved portion. Gifts made before the two year´s deadline to such persons and/or entities are out of the scope of the challenge. Assets received during the lifetime of the deceased by persons who are entitled to the reserved portion by law are taken into account when the reserved portion is calculated (not depending on the date of the gift) and diminishes their claims.
Liechtenstein law turns primarily to the title deeds to determine ownership.
An extract from the land register, which enjoys public faith in Liechtenstein, determines the current ownership of property in Liechtenstein.
If the property owner is married, but the spouse does not appear as joint owner in the land register, then the registered spouse may dispose of the property independently.
It is not possible for a person to employ the vehicle of a trust, or to register the ownership of real property in Liechtenstein with an offshore company, in order to avoid Leichtenstein forced heirship law.
The rights and duties of foreigners are equal to that of Liechtenstein citizens except in cases of acquisition of property by purchase or inheritance. Acquisition of real estate in Liechtenstein by resident and non-resident foreigners or by legal entities which have a majority interest must receive approval by a special commission.
Minors who inherit require guardians.
In case of underage inheritance by a minor who is legally not adult, the parents are guardians by law. If the parents are heirs themselves, the court appoints a guardian.