B4 Other tax provisions Taxation of the dissolution of the foundation
Taxation of the beneficiary contribution (distribution)
Individuals are subject to unlimited wealth and income tax liability in Liechtenstein, provided they have their domicile or habitual residence in Liechtenstein. The unlimited tax liability covers the entire worldwide assets and the entire worldwide acquisition.
If a natural person has neither domicile nor habitual residence in Liechtenstein, he is subject to limited wealth or income tax on his domestic assets and domestic acquisitions. Only real estate located in Liechtenstein, including land used for agricultural and forestry purposes, and permanent establishments are considered domestic assets.
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Distributions made by the Liechtenstein foundation to beneficiaries who are not subject to unlimited tax liability in Liechtenstein remain tax-free in Liechtenstein. The distribution does not result in a limited tax liability.
A withholding tax is not levied in Liechtenstein.
Tax measures against profit shifting
Dividend distributions from a low-taxed subsidiary with passive income are taxed at the Liechtenstein parent company (foundation) at the income tax rate of 12.5%.
Group taxation
A Liechtenstein foundation may also benefit from Liechtenstein group taxation rules, especially in the case of multi-tiered, international holding structures in connection with loss offset possibilities.
Substitute inheritance tax
Liechtenstein does not know any substitute inheritance tax.
Capital tax
Capital tax was abolished in Liechtenstein without replacement.
Estate tax
Liechtenstein does not have an estate tax.
Inheritance tax
Liechtenstein has abolished inheritance tax.
Gift tax
Liechtenstein has abolished the gift tax.
Withdrawal tax
Liechtenstein does not have an exit tax.
Taxation of the dissolution of the Liechtenstein foundation
The dissolution of a Liechtenstein foundation does not trigger any taxes on the Liechtenstein side.
Since there is no exit taxation in Liechtenstein, no hidden income tax reserves are recorded within the foundation in the case of the final distribution. The final distributions also do not give rise to any limited tax liability in Liechtenstein; withholding tax is not levied.
