Feb 2023


Law Over Borders Comparative Guide:

Private Client


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Contributing Firm


Compared to Liechtenstein’s population of roughly 38,000, the number of 24,000 corporations, foundations and trusts under management today is significant. With 10,000 foundations, the civil law “alter ego” of the common law trust is still the most frequent asset protection structure in use. 

Corporate laws date back to 1926, when Liechtenstein also introduced, as a first continental European jurisdiction, the concept of the Anglo-Saxon trust. For almost 100 years, Liechtenstein’s legal and fiduciary practice employs these legal instruments with in-depth experience and expertise.

Liechtenstein is a civil law jurisdiction, and, sandwiched between Switzerland and Austria in the heart of the Alps, often borrows from these two neighbouring jurisdictions both statutory and case law, along with professionals for roughly 120 trust companies and many esteemed members of the judiciary. Courts and regulatory authorities are known to work efficiently and timely, having the resources and the know-how to facilitate and ensure swift registration, licensing and the resolution of complex and often international cross-border disputes involving significant wealth in a confidential manner. 

Liechtenstein is also an early adopter of international initiatives and laws seeking to enforce the exchange of tax information as well as anti-money laundering laws. As a member of the European Economy Area (EAA), the “little brother” of the EU, Liechtenstein is always at the pace of the European Union in implementing internationally harmonised standards and regulations, also offering EU-passporting to financial intermediaries, including investments funds, thus allowing them to provide services in the EU. Concurrently, Liechtenstein companies and trusts enjoy the same legal freedoms and privileges as EU equivalents, and they are protected from discrimination. Some of the laws, however, are not harmonised, which is on purpose. By way of example, the EU-laws on taxation are not relevant for Liechtenstein, and, most importantly, there are no multilateral treaties allowing for the enforcement of foreign judgements in Liechtenstein. Accordingly, legal disputes need to be fully retried in Liechtenstein courts, which many consider as a strong technique in favour of asset protection. 

For many hundred years, the Principality was shaped and reigned by the Royal family who has shared with the people and the country its name, integrity, sovereignty and success. Today, the Royals own the largest bank in Liechtenstein, which also ensures that compliance, confidentiality and a stable currency and economy work for the whole financial industry and provide for a steady future.   


1 . Tax and wealth planning

Whenever companies or trusts are managed from within Liechtenstein, they are taxable in Liechtenstein. Generally, there is a 12.5% corporate tax, which, however, will not be levied in many circumstances. First, many corporations and foundations opt for a unique flat tax regime which is at CHF 1,800 annually only, if the circumstances so allow, and trusts enjoy such preferential tax regime at all times. Second, dividends and capital gains are not taxable at all (subject to the new anti-avoidance rules discussed below).


1.1. National legislative and regulatory developments

Liechtenstein is currently facing the implementation of the Organisation for Economic Co-operation and Development (OECD) requirements regarding the introduction of a global minimum tax of 15% for companies with a turnover of more than EUR 750 million. It must be assumed that the Liechtenstein legislator will implement the requirements of the G20/OECD Inclusive Framework into domestic Liechtenstein law at the beginning of 2024. Under the currently applicable tax regime in Liechtenstein, companies (legal entities) are subject to an annual income tax, which is levied in the form of a flat-tax rate of 12.5%. This corporate tax rate is thus significantly lower than the planned 15%. The trend towards reducing international tax competition is therefore also noticeable in Liechtenstein. However, Liechtenstein as a jurisdiction is able to shine with numerous local advantages: despite the elimination of tax competition, Liechtenstein continues to be an attractive jurisdiction for wealth planning, in particular due to its liberal and highly modern corporate law and the efficient rule of law.


1.2. Local legislative and regulatory developments

As from 1 January 2022, Liechtenstein also introduced new anti-avoidance rules on dividend income and capital gains. Dividend income and capital gains are, generally, tax-exempt for income tax purposes in Liechtenstein. However, those deriving from investments in foreign legal entities are no longer tax-exempt if more than 50% of the total income of the foreign legal entity consists of passive income and its taxable income is subject, directly or indirectly, to low taxation. For participations owned before 1 January 2019, the new rules did not apply if a dividend income or capital gain was realized before 31 December 2021. As of 1 January 2022, regular anti-avoidance rules apply to such participations. 


1.3. National case law developments

In terms of wealth planning, there is new ground-breaking case law regarding the special formal requirements for allographic wills. In 2022, the case law once again confirmed that caution must be exercised when drawing up a will in the form of an allographic will, as special formal requirements must be observed. In the case of an allographic will, the text may also be electronically printed or drafted by a third party. However, an allographic will is invalid if the testator has signed on a loose sheet of paper without there being any physical connection or any connection in terms of content with the sheet containing the actual terms of the will. An allographic will consisting of several loose sheets requires a note, signed by the testator, on the additional sheet with reference to their testamentary disposition. In contrast, the mere continuation of the text in the case of a testamentary disposition made by a third party which is not handwritten is not sufficient to establish the internal unity of the document.


1.4. Local case law developments

Although Liechtenstein law acknowledges forced heirship rules, it is also established that such can be avoided legitimately by sophisticated wealth planning. As a general rule, if the founder or settlor survives for a period of two years, the creation of the trust or foundation (located in Liechtenstein) to which they bequest their assets (where there are no heirs with forced heirship claims as appointed beneficiaries, and further provided that they divest of reserved powers or any other means of control), become immune from the claw-back of forced heirs (and, mostly, all other potential creditors) in Liechtenstein. Recent case law deals with the level of control permitted in the circumstances to protect the foundation from the claw-back. 


1.5. Practice trends

Increasingly, wealth planning will require paying attention to gender, religion or similar discrimination issues. The European Court of Human Rights case law appears to have bearings on structuring and wealth planning, where settlors seek to favor, by way of example, male over female beneficiaries. Liechtenstein practice notes that there is a groundbreaking Austrian Supreme Court case where provisions of a family dynasty agreement of a limited liability partnership were considered contra bonos mores and invalid as they provided that distributions to female beneficiaries required protector consent, whereas such to male beneficiaries did not (6 Ob 55/18h). The Austrian Supreme Court considered such provisions discriminatory and unenforceable, and Liechtenstein courts are likely to consider, and apply, such principles against gender or similar discrimination. However, given the international nexus of most of Liechtenstein wealth structures, including trusts and foundations, it will certainly matter where the settlor or founder came from. By way of example, if the settlor of a Liechtenstein trust was based in the middle-east and provided in the Liechtenstein trust deed for Sharia rules (which generally favor male over female heirs and beneficiaries of their estate), it is believed to not be considered discriminatory, as the culture and rules of the settlor's domicile are deemed to be overruling. Only in extreme circumstances, Liechtenstein rules against discriminatory treatment may be considered "public policy" and thus may prevail. 


1.6. Pandemic related developments

Because in the course of the COVID-19 pandemic it was de facto impossible to consult a lawyer or notary due to the contact restrictions imposed by the authorities in many places, the will forms of the testator's own handwritten will and the so-called emergency will have regained more relevance. If a testator wishes to establish a will in writing and without witnesses, then they must write the will, on their own, in handwriting and sign it (§ 578 Civil Code). Although the date and place of the establishment of the will is not prescribed by law, it is strongly recommended for reasons of proof and to avoid later disputes. According to § 597 Civil Code, the emergency will can only be considered as an option if there is an imminent danger that the testator will die or lose the ability to testify before they can declare their last will in another way. In such cases, the testator may also testify orally or in writing with the assistance of two witnesses. However, a last will declared in this way loses its validity three months after the imminent danger in the aforementioned sense ceases to exist.


2 . Estate and trust administration


2.1. National legislative and regulatory developments

In 2022, the Liechtenstein legislator explicitly clarified that board meetings can also be held in hybrid or electronic form. In a hybrid meeting, there is a meeting location where individual board members physically meet while the other board members join electronically. In a virtual meeting, on the other hand, discussions take place and resolutions are resolved exclusively by electronic means.

According to prevailing opinion, the holding of hybrid or electronic board meetings was already (implicitly) permissible under the current legal framework. However, as the issue of hybrid and/or electronic holding of board meetings gained relevance especially in the height of the COVID-19 pandemic, the Liechtenstein legislator decided to explicitly clarify in Art. 112 para. 4 Persons and Companies Act that, as of 1 August 2022, board meetings held in this form are permissible. Thus, it is now explicitly clarified that, for example, foundation board meetings can permissibly take place in hybrid or electronic form. The provision of Art. 112 para. 4 Persons and Companies Act is also applicable to trusts by way of analogy.


2.2. Local legislative and regulatory developments

New rules governing Liechtenstein fiduciaries and professional trustees seek to ensure best practices standards and the avoidance of conflicts of interests. If such conflicts occur, professional fiduciaries are obliged to disclose such conflicts to beneficiaries and seek to avoid or manage them diligently. Frequent audits of fiduciaries by independent auditors have also been introduced to assess whether and to which extent fiduciaries are fully compliant with these standards, including Anti-Money Laundering Rules. Certainly, such AML rules are one of the most serious and efficiently enforced of all international financial centres. Further, new rules ensure that directors of Liechtenstein companies are fit and proper. Persons convicted of certain (insolvency and monetary) criminal acts, in Liechtenstein or abroad, are not eligible to become board members of foundations or trustees of trusts (Art. 180b Persons and Companies Act). 


2.3. National case law developments

Many cases of Liechtenstein courts deal with the liability of Liechtenstein fiduciaries. Generally, it is accepted that fiduciaries, trustees and directors may call to their defence the Business Judgement Rule (BJR). The BJR provides that they are immune from liability if in the preparation and proper act of decision making they follow certain technical procedures, mainly aimed at documenting a well-balanced weighing of pros and cons in the interest of the company and its stakeholders (e.g., beneficiaries of a trust), and provided that there is no conflict of interest (Art. 182 Persons and Companies Act).


2.4. Local case law developments

In recent case law, the rights of beneficiaries are in the focus. As a general trend, certainly in the context of foundations, beneficiaries are entitled to receive information and apply in court for supervisory measures if they have a discretionary beneficial interest only. However, in a trust setting, only beneficiaries with a fixed interest are considered to have those rights. Most recently, Liechtenstein courts are also considering whether the applicant beneficiaries (for example, when applying for the removal of foundation board members or the setting aside of board resolutions) have indeed a legitimate interest to do so. 


2.5. Practice trends

If beneficiaries of trusts and foundations have fallen out with trustees or foundation board members, who did not follow the beneficiaries' request to resign, the Liechtenstein Trustees Association introduced a new and very efficient mediation procedure for removal of recalcitrant fiduciaries and trustees, following critical controversy over Liechtenstein professionals. If the mediation concludes that the existing trustee should resign in favour of the new one (who is being favoured by the beneficiaries) and if it did not, the trustee may become subject to disciplinary sanctions by Liechtenstein courts. In the absence of the "Saunders Vautier” rule, which under common law allows beneficiaries to require the trustee under certain circumstances to terminate the trust and request the distribution of all assets to them, such new proceedings will assist beneficiaries to a great extent to terminate Liechtenstein wealth structures. 


2.6. Pandemic related developments

As mentioned above, Liechtenstein law allows for board meetings to be held in hybrid or electronic form, which is a prompt and adequate response to pandemic related restrictions in travels and thus physical meetings.


3 . Estate and trust litigation and controversy


3.1. National legislative and regulatory developments

The latest legislative reform of the Liechtenstein procedural code stems from 2019. The Liechtenstein legislator used this reform to update and modernise procedural rules and to catch up with its Austrian model law. 

In 2022, the Liechtenstein legislator introduced a significant shortening of the Statute of Limitation period for damage claims brought against trustees, foundation board members or other bodies of legal entities, which will become relevant in the future. As from 1 August 2022, claims for damages against foundation board members and trustees who, for example, commit a breach of trust, are in any case time-barred within a period of 10 years from the time of the damaging act, irrespective of the knowledge of the damage or the person of the damaging party. Prior to 1 August 2022, this absolute limitation period was situated significantly higher, at 30 years.

Regulatory developments closely followed European requirements. In 2021, the UBO-register Act was adapted to the 5th Anti-Money-Laundering-Directive standard including a reform of the access to UBO (i.e., Ultimate Beneficial Owners) data for third parties. However, access by the public to data still requires a legitimate interest and the approval of a UBO commission board. Further, discretionary beneficiaries are not subject to registration, and an applicant who demonstrated a legitimate interest may only obtain information from the register on beneficial owners who are deemed controlling. 


3.2. Local legislative and regulatory developments

In trust and estate litigation, supervisory court proceedings started by beneficiaries to set aside board resolutions of foundations and trusts or to remove board members or trustees are more and more frequent in Liechtenstein. Some of the reported cases deal with the obvious trend of foundation governing bodies to vary the constituting documents and to opt for the foundation to be subjected to compulsory government supervision, an act often considered by beneficiaries as a hostile attempt to deprive them of their right to information. In many cases, the courts rejected such attempts as unlawful, as it could eliminate the checks and balances within the foundation governance. 


3.3. National case law developments

Over the last years, the Liechtenstein Supreme Court backed asset tracing efforts in a widely recognised landmark decision (LES 2018, 270). In short, the Supreme Court strengthened the rights of decanted entities and allows them to claw back their assets from third parties if the asset transfer exceeded their purpose and the third party knew or ought to have known about it. 

On a procedural note, the Supreme Court has held in several recent decisions that a founder or a beneficiary cannot necessarily participate as side interveners in disputes of 'their' foundation. They cannot deduce from their mere position as founder or beneficiary a legitimate interest, which, however, is a requirement to participate.

Most interestingly, in the context of proceedings where beneficiaries apply for the removal of trustees or fiduciaries, case law seems to be changing regarding conflicts of interests. Previously, a member of the foundation board or trustee had to abstain from voting only if a specific conflict of interest was present. In a recent decision, the Supreme Court held that such member must abstain from voting even in cases of a prima facie conflict of interest, failing which they became unfit to act and needed to be removed.


3.4. Local case law developments

If, in the context of estate planning, assets of a (later) decedent are transferred as endowments to legal entities which are to be legally separated from the decedent, such as foundations or trusts, it may be the case that those entitled to a compulsory portion of the decedent's estate (above all spouses and children) are reduced in their compulsory portions as a result of this transfer of assets and subsequently reverse this transfer of assets by asserting their compulsory portions (in court).

Pursuant to § 785 para. 3 Civil Code, however, endowments shall not be considered in the calculation of the compulsory portion claim if they were made earlier than two years before the death of the decedent to persons not entitled to a compulsory portion. However, according to the so-called Vermögensopfertheorie (Doctrine on "sacrificing" the assets) developed in case law, this two-year period does not begin to run until the decedent irrevocably and finally disposes of the assets transferred to a foundation/trust as an endowment. 

In the context of endowments to foundations or trusts, the sacrifice of assets is not yet considered to have been made if the trust is revocable or the settlor can change the beneficiaries of the trust. Therefore, if the sacrifice of assets has been made by the decedent, after the expiration of two years from the transfer of assets to a foundation or trust, the endowment can no longer be challenged by invoking a shortened claim to a compulsory portion. By way of example (from recent case law), the sacrifice of assets in the case of an endowment of a property by the decedent to a foundation is deemed to have been made even if the decedent has reserved a usufruct right to the property in his/her favour.


3.5. Practice trends

In 2021, the Liechtenstein Supreme Court held that information requests can be legitimate if the party was ordered by a foreign court to request said information (even under threat of contempt of court). Until that decision, it was widely assumed that such attempt may be subject to criminal liability pursuant to the Liechtenstein State Protection Act, which is the "legal clone" of Article 271 Swiss Criminal Act. 


3.6. Pandemic related developments

During the pandemic, the Liechtenstein courts and authorities showed remarkable flexibility when it came to witness questioning via video conference. Unfortunately, this has not (yet) led to a sustainable change in procedural rules. From our experience, judges have started requesting the personal appearance of witnesses again, which can be a problem for foreign witnesses and parties.

Due to the pandemic, a provision was included in the Liechtenstein procedural law, which was limited until 30 June 2022 and has since expired, which enabled courts and administrative authorities, with the consent of the parties, to conduct oral proceedings and hearings without the personal presence of the parties or their representatives using technical means of communication.

Further, arbitration hearings do not require face-to-face attendance, which has already been explicitly confirmed in case law. Video conferencing, real-time image and sound transmissions, serves the purpose equally well. This is a form of communication that has increasingly come into focus or gained relevance due to advancing digitalization and not least also as a result of the travel and contact restrictions caused by the COVID-19 pandemic.

Against this background, it should also be noted that physically held meetings will probably be increasingly pushed back in favor of more modern means of communication in the future, and not only in cross-border (arbitration) proceedings. Trust disputes, as well as most foundation disputes, are arbitrable in Liechtenstein.


4 . Frequently asked questions

1. Is the new Beneficial Owner Register in Liechtenstein public?

In practice, it is not. Only law enforcement authorities combatting money laundering are able to access the register. The general public will only be granted access if an applicant could demonstrate to a commission comprised of judges and data protection experts that they have a legitimate interest for AML purposes. Even if they could in exceptional circumstances, they would not see much more than the name of the still living settlor or founder and persons exercising control, which, in the absence of any such controlling persons in a (standard) discretionary set-up of a trust or foundation, they would be provided with the identities of the fiduciaries of trustees only. 

2. Will my children, as the future beneficiaries of my trust or foundation, be subject to registration to the BO Register?

Certainly not. Regularly, fiduciaries will not, as they do not have to, register the names of the beneficiaries and family members. It would be totally sufficient if they registered as beneficiaries “the descendants of the founder and other family members”, without giving any names or other specifics. 

3. How can I make sure that the assets in the trust are safe from the onslaught of creditors?

First, allow yourself as little control as possible, and distance yourself from the trust and foundation which is set up for you and/or your family. If you want to reserve some level of control, you may do so, but leave and defer it to an independent person you trust, which we call “protector”. It is a separate body that oversees and controls the trustees and fiduciaries. Such protector may even be vested with the powers to “hire and fire” trustees and foundation board members. Second, the location of the respective assets held by the trust or foundation may be key in determining how solid the asset protection works. 

4. Will such protector be subject to reporting under the Common Reporting Standard (CRS) regime?

Some clients wish to entrust such office of protector to a person who, however, may wish to avoid the net asset value of the trust or foundation being reported to their homeland revenue service (which may be the case if they were considered “beneficial owners” under CRS). It is the level and width of control that may vary from case to case and which will decide on whether a protector is a controlling person and will thus be reportable as “beneficial owner”. In most circumstances, protectors are not reportable, if they have no absolute powers. 




Craig MacIntyre
Grace Quinn


Adriane Pacheco
Beatriz Martinez
Humberto Sanches
Juliana Cavalcanti


Marilyn Piccini Roy

England & Wales

Bethan Byrne
Patrick Harney


Line-Alexa Glotin


Dr. Andreas Richter
Dr. Katharina Hemmen


Matt Guthrie


Lyat Eyal


Camilla Culiersi
Gian Gualberto Morgigni
Giovanni Cristofaro
Raul-Angelo Papotti


Tomoko Nakada


Sarajane Kempster


Bilal Ajabli
Ellen Brullard
Eric Fort
Guy Harles


Mark McKeown
Paul Macaulay


Florentino Carreño


Ruth Bloch-Riemer
Tina Wüstemann

United States

Jonathan Byer
Joshua S. Rubenstein

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