Reminder - Participation exemption in Liechtenstein - Check need for action now

The new rules regarding the participation exemption in Liechtenstein came into effect on 1.1.2019. For participations that were owned by the Liechtenstein shareholder before 1.1.2019, the new provisions will apply as of 1.1.2022.

Overview of the changes

The amended provisions on the participation exemption in Liechtenstein came into effect on January 1, 2019. The changes relate to the tax exemption of foreign participation income and capital gains as well as the tax deductibility of amortizations and losses from participations. The tax exemption in Liechtenstein will be denied for foreign participation income and capital gains if these result from a passive activity and are subject to low taxation. In addition, amortizations on participations and capital losses from the sale of participations will be added back to the taxable income. Read more about this topic in our publication from April 2019.

For participations in foreign legal entities acquired before January 1, 2019 ("old participations"), the new regulations will apply to the Liechtenstein shareholder for the first time in the tax year 2022.

We therefore strongly recommend reviewing any existing participation structures now to ensure that any reorganisations could still be implemented before the end of 2021. We are happy to support you in the analysis and implementation.

February 2021 | Authors: Andreas Müller, Christina Stocker

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