Foundation of an Asset Management Company in Liechtenstein

An Asset Management Company in Liechtenstein is a legal entity or partnership which provides the following services: portfolio management, investment advice; the acceptance and transmission of instructions dealing with one or more financial instruments and securities- and finance analysis.

An Asset Management Company in Liechtenstein must perform its services in compliance with its legal duties regarding good behaviour, due diligence and its fiduciary duties. An Asset Management Company in Liechtenstein is required to classify its clients as being either non-professional, professional or as being a suitable opposing party. This classification is then used to determine the level of protection owed to a particular client. Clients classified as non-professional are due the highest level of protection.

An Asset Management Company in Liechtenstein is subject to the supervision of Liechtenstein‘s Financial Market Authority (FMA). As long as an Asset Management Company in Liechtenstein only manages its own assets and no services are provided for third parties, any other company form in Liechtenstein can be used. Private asset management is not subject to supervision by Liechtenstein‘s Financial Market Authority (FMA).

Foundation of an Asset Management Company in Liechtenstein

An Asset Management Company in Liechtenstein may be formed as a private corporation (Public Limited Company (PLC., Corp.) or Trust Enterprise (Trust reg.)), as an Establishment, as a Foundation, as a Limited Liability Partnership or as a General Partnership. Notwithstanding this, no natural persons are permitted to undertake asset management. The legal form in which the Asset Management Company is set up will determine what the particular formation requirements are.

A company must apply to Liechtenstein‘s Financial Market Authority (FMA) for a licence to operate as an Asset Management Company in Liechtenstein. Applications will be granted where the following requirements are satisfied by a company:

The company must have its registered office and central administration in Liechtenstein and it must have a permanent establishment. In addition, the company must provide proof that it has a minimum capital of 100,000 Swiss Francs.

In terms of its organisation, at least one of the directors of the company is required to be permanently resident in Liechtenstein. The company must also appoint an external auditor who shall undertake an annual audit of the Asset Management Company’s business activities.

After a licence has been issued by Liechtenstein‘s Financial Market Authority (FMA), an Asset Management Company in Liechtenstein will be supervised by the Financial Market Authority (FMA).

An Asset Management Company in Liechtenstein is able to offer and provide its services throughout the whole of the European Economic Area (EEA) and European Union (EU).

Tax Advantages of an Asset Management Company in Liechtenstein

Preferential Taxation of Private Asset Structures (PAS)

Generally, companies in Liechtenstein are subject to an annual flat income tax rate of 12.5% on its taxable income .

Notwithstanding this, an Asset Management Company in Liechtenstein which qualifies as a Private Asset Structure (PAS) in accordance with Liechtenstein‘s tax law of 1st January 2011 is required only to pay annual income tax of 1,200 Swiss Francs. To qualify as a Private Asset Structure (PAS), it is required that the legal entity‘s sole purpose is the management of assets and that no commercial activities are being undertaken. Only the acquisition, holding, management, sale and transfer of the assets is permissible. Moreover, a Private Asset Structure (PAS) is only permitted to hold investments if it exercises no actual influence on the management of the subsidiary company. The owner of a Personal Asset Structure (PAS) must either be a natural person, a company that qualifies for the Personal Asset Structure (PAS) tax status or a person who acts as an intermediary between the two aforementioned groups

Preferential Taxation of Holding Companies

Liechtenstein’s new tax law wholly exempts investment proceeds from tax. This exemption is irrespective of the amount of and the period of time in which the investments were held. Consequently, no tax is payable on dividends and capital gains made through the sale of investments to domestic of foreign legal entities in Liechtenstein.

Tax Exemption

As a result of Liechtenstein’s tax reforms, the capital tax was abolished as was the corporate income- and coupon taxes distribution surcharge. Notwithstanding this, the coupon tax exemption does not apply to those old reserves that were in existence as at 31st December 2010. Consequently, the distribution of the old reserves was subject to the reduced tax rate of 2% in 2011 and 2012 and is subject to a tax rate of 4% in the years thereafter.

Furthermore, income from intellectual property rights created or acquired on or after 1st January 2011 is subject to an 80% tax exemption. The said income is consequently subject to an effective tax rate of 2.5%.

The Carrying forward of Losses and Group Taxation

Liechtenstein‘s tax reform has made it possible for losses to be carried forward without any time restriction. Moreover, the gains and losses made by group companies in Liechtenstein are able to be set off against each other. However, it is required that the legal entity making such an application be subject to unlimited tax liability in Liechtenstein and consequently have its registered office or actual administration in Liechtenstein. The said legal entity must further hold a majority shareholding in domestic or foreign legal entities in Liechtenstein. Where the legal entity making the application is subject to only limited tax liability in Liechtenstein, it is required that it have a branch in Liechtenstein to which the investments can be allocated.