Foundation of an Asset Management Company in Liechtenstein
An Asset Management Company in Liechtenstein is a legal person 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).
Insofar as an Asset Management Company in Liechtenstein only manages its own assets and provides no services to third parties, any other company form in Liechtenstein can be used. Private asset management is not subject to supervi- sion by Liechtenstein‘s Financial Market Authority (FMA).
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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 Partner- ship 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. Ap- plications will be granted where the following requirements are satisfied by a company:
- It must have its registered office, its main place of central management and control and its place of business in Liechtenstein;
- It must provide proof that it has a minimum capital of 100,000 Swiss Francs;
- At least one of the directors of the company is required to be permanently resident in Liechtenstein;
- It must appoint an external auditor who shall undertake an annual audit of its 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).
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 corporate income tax at a single 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 January 1st, 2011, is required only to pay annual corporate income tax of 1,200 Swiss Francs. To qualify as a Private Asset Structure (PAS), it is required that the legal person‘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. Moreo- ver, 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 afore-mentioned groups
Special 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 legal persons in or outwith Liech- tenstein.
As a result of Liechtenstein‘s tax reforms, the capital tax was abolished as was the corporate income- and coupon taxes distribution surcharge. Notwithstan- ding 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 were subject to the reduced tax rate of 2% in 2011 and 2012 and are subject to a tax rate of 4% in the years thereafter.
Furthermore, income from intellectual property rights created or acquired on or after January 1st, 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 person making such an application be subject to un- limited tax liability in Liechtenstein and consequently be domiciled or have its actual place of central management and control in Liechtenstein. The said legal person must further hold a majority shareholding in legal persons in or outwith Liechtenstein. Where the legal person making the application is subject to only limited tax liability in Liechtenstein, it is required that it have a branch in Liech- tenstein to enable to which the investments can be allocated.
Free Movement of Services and Freedom of Establishment
An Asset Management Company in Liechtenstein is able to offer and provide its services throughout the the whole of the European Economic Area (EEA) and European Union (EU).