LiechtensteinLiechtenstein

Legal ReferenceThe Liechtenstein Tax Act of 23. September 2010, National Gazette 2010 No. 340 (Tax Act) The Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Article 49 of the Tax Act in connection with Article 31b of the Tax Ordinance create the necessary legal basis for the application of the arm’s length principle.

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Liechtenstein relies on the OECD Transfer Pricing Guidelines (TPG) as a source for the interpretation of the arm’s length principle. Pursuant to Article 31b paragraph 1 of the Tax Ordinance, taxpayers are required to apply the current version of the OECD TPG when determining the transfer prices for transactions with closely related persons and permanent establishments.

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Article 31a of the Tax Ordinance provides the definition of related parties. Under Article 31a of the Tax Ordinance, the following natural and legal persons in particular shall be deemed to be closely related: a) Persons who have a direct or indirect interest in the taxpayer; b) Persons who currently, or will in future, directly or indirectly benefit from the taxpayer; c) Persons in whom the taxpayer has a direct or indirect interest, or from whom the taxpayer directly or indirectly benefits; d) Executive bodies of the taxpayer; e) Persons with whom the taxpayer is in a close personal relationship, in particular through a family connection or as a friend; f) Persons in a close relationship with closely related persons as referred to in a) to d) in the way referred to in e); Persons in whom closely related persons referred to in a) to c) have a direct or indirect interest or from whom they directly or indirectly benefit. For TP purposes there is a documentation requirement for transactions with related parties, provided that their direct or indirect shareholding or beneficial interest amounts to at least 25% (Article 31b paragraph 7 of the Tax Ordinance).

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Liechtenstein relies on the transfer pricing methods suggested in the OECD TPG. Article 31b paragraph 1 of the Tax Ordinance provides the legal basis. According to Article 31 paragraph 1 (f) of the Tax Ordinance, the tax administration accepts any other suitable method, if the methods enumerated in the ordinance (CUP, RPM, CPM, TNMM, PSM) are not suitable to reflect the arm's length principle appropriately. In practice, no other method is used.

• CUP (provided)
• Resale Price (provided)
• Cost Plus (provided)
• TNMM (provided)
• Profit Split (provided)
• Other (provided)

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

As defined in Article 31b paragraph 1 of the Tax Ordinance, Liechtenstein relies on the most appropriate transfer pricing method as recommended by the OECD TPG.

• Hierarchy of methods (not selected)
• Most appropriate method (selected)

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Liechtenstein domestic legislation does not contain specific guidance on commodity transactions, but relies on the guidance in the OECD TPG as defined in Article 31b paragraph 1 of the Tax Ordinance.

• For controlled transactions involving commodities, the guidance contained in paragraphs 2.18-2.22 of the TPG is followed. (selected)
• Domestic legislation mandates the use of a specific method for controlled transactions involving commodities (if so, please explain) (not selected)
• Other (if so, please explain) (not selected)

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Pursuant to Article 31b paragraph 1 of the Tax Ordinance, Liechtenstein follows the OECD TPG, which include the guidance on comparability analysis in Chapter III of the TPG.

In practice, statistical tools are used (different interquartiles).

In practice, comparability adjustments would be allowed.

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

However, pursuant to Article 31b paragraph 1 of the Tax Ordinance, Liechtenstein follows the OECD TPG.

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

However, pursuant to Article 31b paragraph 1 of the Tax Ordinance, Liechtenstein follows the OECD TPG.

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

However, pursuant to Article 31b paragraph 1 of the Tax Ordinance, Liechtenstein follows the OECD TPG.

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Liechtenstein applies the simplified approach for low value-adding intra-group services as described by the OECD. Article 31b paragraph 1 of the Tax Ordinance provides the legal basis.

Legal ReferenceThe circular containing safe harbour rules is available under (German only): Onlineschalter  Zinssätze für die Berechnung der geldwerten Leistungen

Liechtenstein generally follows the OECD TPG on financial transactions. The Fiscal Authority of Liechtenstein issues a circular containing safe harbour rules with regard to intra-group interest loans in domestic and foreign currency. The circular defines currency-specific interest rates for loan from or to related parties. These are considered a "safe haven". The right to prove deviating interest rates based on a detailed TP-study is possible.

Legal ReferenceArticle 54 of the Liechtenstein Tax Act

The deduction of interest on equity is limited so that it may not give rise to or increase a loss for the period.

Liechtenstein would follow the guidance in the OECD TPG on CCAs.

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437 The Law of 4 November 2016 on the International Automatic Exchange of Country-by-Country Reports of Multinational Enterprise Groups (CbC Act), National Gazette 2016 No. 502 The Ordinance of 20 December 2016 on the International Automatic Exchange of Country-by-Country Reports of Multinational Enterprise Groups (CbC Ordinance), National Gazette 2016 No. 510

Article 31b paragraph 2 of the Tax Ordinance provides the legal basis concerning the filing requirement for Master files and Local files. Article 31b paragraphs 4 and 8 of the Tax Ordinance provide the legal basis for filing requirements for small and smaller entities (see question 24). Smaller entities are the ones with consolidated turnover of less than CHF 900 mio but higher than CHF 51.8 mio. Smaller groups have to prepare a description of the business model, a list of all business relationships with related parties, reasoning and result of the TP method used (Article 31b paragraph 4). The CbC Act in connection with the CbC Ordinance provide the necessary legal basis for CbC Reporting.

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (not selected)
• Other (specify) (selected)

Legal ReferenceThe Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437 The Law of 4 November 2016 on the International Automatic Exchange of Country-by-Country Reports of Multinational Enterprise Groups (CbC Act), National Gazette 2016 No. 502

Pursuant to Article 31b paragraph 6 of the Tax Ordinance, the documentation according to Article 31b paragraphs 2 to 5 of the Tax Ordinance has to be filed upon request with the Fiscal Authority of Liechtenstein within 60 days in German or English. The CbC report shall be filed with the Fiscal Authority within 12 months after the end of the reporting fiscal year in German or English (Article 6 of the CbC Act).

Legal ReferenceThe Liechtenstein Tax Act of 23. September 2010, National Gazette 2010 No. 340 (Tax Act) The Law of 4 November 2016 on the International Automatic Exchange of Country-by-Country Reports of Multinational Enterprise Groups (CbC Act), National Gazette 2016 No. 502

The Tax Act provides for penalty provisions under Article 135 et seq. Sanctions may apply if the taxpayer fails to fulfil a duty imposed under the Tax Act or the Tax Ordinance. If a person wilfully or negligently fails to comply with the documentation obligation, he or she shall be liable to financial penalties up to CHF 10 000. The penalty provisions of Article 20 et sqq. of the CbC Act provide for compliance incentives regarding the CbC Reporting. A violation of the filing obligation (this includes failure to file a CbC report, a late filing of a CbC report, and inaccurate filing of a CbC report) is subject to fines of up to CHF 250 000.

Legal ReferenceThe Liechtenstein Tax Act of 23. September 2010, National Gazette 2010 No. 340 (Tax Act) The Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Pursuant to Article 49 paragraph 2 of the Tax Act all taxpayers are obligated to provide, upon request by the Liechtenstein Fiscal Authority, documentation regarding the adequacy of transfer prices of transactions with related persons and permanent establishments. However, the Tax Ordinance provides a simplified approach for small entities. Entities of a group with a turnover of less than CHF 51.8 Mio have to provide evidence upon request for the compliance with the ALP.

Legal ReferenceThe Liechtenstein Tax Act of 23. September 2010, National Gazette 2010 No. 340 (Tax Act) The Liechtenstein Tax Ordinance of 21. December 2010, National Gazette 2010 No. 437

Article 93a of the Tax Act in connection with Article 38a of the Tax Ordinance constitutes the legal basis for Rulings and Advance Pricing Agreements. There is no general time period set for an APA. The application for an APA may include a request for a rollback of the APA to prior tax years, as long as the facts supporting the APA are identical to the facts from the prior years for which the statute of limitation has not expired. The relevant legal provisions concerning Mutual Agreement Procedures can be found in Article 124 of the Tax Act, in the respective Double Taxation Agreement (DTA) and in the fact sheet on international mutual agreement procedures under the double taxation conventions with respect to taxes on income and on capital.

• Rulings (selected)
• Enhanced engagement programs (not selected)
• Advance Pricing Agreements (APA) (selected)
• Unilateral APAs (selected)
• Bilateral APAs (selected)
• Multilateral APAs (selected)
• Mutual Agreement Procedures (selected)
• Other (please specify) (not selected)

Legal ReferenceThe circular containing safe harbour rules is available under (German only): Onlineschalter  Zinssätze für die Berechnung der geldwerten Leistungen

The Fiscal Authority of Liechtenstein issues a circular containing safe harbour rules with regard to intra-group interest rates (see question 18).

The financial statements of a company can be changed, among other things to make year-end adjustments, until they are formally approved by the competent organ.

In practice, secondary adjustments are made. Generally, the approach of the deemed dividend and deemed equity contributions is used by Liechtenstein.

10 (Andorra, Germany, Guernsey, Iceland, Jersey, Monaco, Netherlands, Switzerland, Hungary, UAE). Except for the treaty with Austria, Liechtenstein did not conclude any pre-2008 treaties. The 2008 changes of the Commentary to article 7 of the OECD Model Convention by the AOA already existed when the treaties were negotiated. Furthermore, the parts of the AOA that were included in the 2008 Update to the OECD Commentary supposedly apply also retroactively to “old” treaties and therefore, in practice, Liechtenstein applies the AOA also on its tax treaty with Austria.