Liechtenstein, a small yet prosperous country nestled in the heart of Europe, offers a welcoming environment for expatriates and digital nomads seeking tax advantages. The country's favorable tax regime, coupled with its stunning Alpine scenery and high quality of life, makes it an attractive destination for professionals and remote workers alike.
Eligibility Criteria
To qualify for tax breaks as an expatriate or digital nomad in Liechtenstein, individuals must meet specific criteria:
- Expatriates: Expatriates are defined as individuals who have relocated to Liechtenstein for employment purposes and are not considered domiciled in the country.
- Digital Nomads: Digital nomads are individuals who work remotely for clients outside of Liechtenstein and do not have a permanent residence in the country.
Types of Tax Breaks
Liechtenstein offers a range of tax breaks tailored to expatriates and digital nomads:
- Tax Exemption on Foreign Income: Expatriates and digital nomads are exempt from paying taxes on income earned outside of Liechtenstein. This exemption applies to both employment income and business profits.
- Reduced Tax Rates: Expatriates and digital nomads benefit from reduced tax rates on their Liechtenstein-sourced income. The standard corporate tax rate is 12.5%, while the personal income tax rate ranges from 1.2% to 25%, depending on the individual's income level.
- Tax Deductions: Expatriates and digital nomads can deduct certain expenses from their taxable income, including housing costs, health insurance premiums, and education expenses.
Application Process
To claim tax breaks as an expatriate or digital nomad in Liechtenstein, individuals must follow these steps:
- Obtain a Residence Permit: Expatriates must obtain a residence permit from the Liechtenstein Immigration Office. Digital nomads may apply for a short-term residence permit or a long-term residence permit, depending on their intended length of stay.
- File a Tax Return: Expatriates and digital nomads must file an annual tax return with the Liechtenstein Tax Office. The tax return should include documentation supporting their eligibility for tax breaks, such as proof of foreign income or remote work contracts.
Legal Framework
The tax breaks for expatriates and digital nomads in Liechtenstein are established by the following legal instruments:
- Tax Act (Steuergesetz): Outlines the general tax rules and regulations, including the tax exemption on foreign income and the reduced tax rates for expatriates and digital nomads.
- Residence Permit Ordinance (Aufenthaltsverordnung): Specifies the requirements for obtaining a residence permit in Liechtenstein.
- Double Taxation Agreements: Liechtenstein has signed double taxation agreements with over 50 countries, which prevent individuals from being taxed on the same income in both Liechtenstein and their home country.
Liechtenstein's tax incentives for expatriates and digital nomads are designed to attract skilled professionals and remote workers to the country. By offering favorable tax treatment, Liechtenstein aims to foster economic growth, innovation, and a diverse and vibrant society.
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