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By Stefan Nolte
Liechtenstein, the world’s sixth smallest country, squeezed into the Alp-Rhine-Valley, is the only Principality in the world where a Constitutional Monarchy truly rules, based on a democratic foundation, meaning that the legislature cannot unilaterally change the laws of the country.
The Princely House can however not change the laws on solely its initiative either.
The Principality of Liechtenstein, founded in 1719, is the oldest state in Europe in terms of borders unchanged. This continuity has been secured through wise alliances that always focused on the protection of the Principality and its inhabitants.
Being a country with a population of only 38,100 people and no army (since 1868), Liechtenstein’s alliances always aimed for maximum security whilst maintaining maximum independence.
Although not a member of the European Union, it participates in both the Schengen Area and the European Economic Area and enjoys customs union and monetary union with Switzerland.
Protection in general and protection of personal rights and property has become a central value for Liechtenstein.
For example, Liechtenstein has no emergency laws, unlike many other countries, which would allow the government to confiscate any private property in case of financial crises, terror attacks or wars. You might remember that the Government of Cyprus considered confiscating the content of security deposit boxes at banks but later withdrew from this idea.
As a result of its political continuity, solid finance policies and a financially strong public administration, Liechtenstein is one of only four countries in the world enjoying zero indebtedness.
The strong protection of personal rights and property has gained Liechtenstein a well-established top-tier position for wealth planning and wealth protection, and as a financial centre in general.
Consequently, Liechtenstein provides a sound infrastructure consisting of banks and finance companies, wealth management companies, investment firms, trust services, law offices, auditors and insurance companies.
Focusing on wealth preservation, Liechtenstein is also home to one of Europe’s safest non-bank vaulting facilities for physical precious metals, Liemeta AG, with its subsidiary in Cyprus, Liemeta ME Ltd, promoting its parent company’s vaulting services in the East-Med and Middle East.
Liemeta AG provides precious metals storage services as well as sales and re-purchase services, including bonded warehouse vaults for white precious metals.
Offering segregated and allocated, fully insured storage options where the clients are the documented legal owners of their precious metals, Liemeta gained the trust of both individual and corporate clients, for whom the company stores precious metals worth more than CHF 1.5 bln.
The company and its high-security storage facilities are supervised by the Financial Market Authority of Liechtenstein.
As a non-financial company, Liemeta AG is not part of the automated exchange of information exchange system (AEOI) but does indeed follow court orders.
Clients of Liemeta are provided with a so-called Certificate of Evidence of Insurance (EOI), issued by the insurer and in the name of the client, confirming the insured value of the client’s stored assets.
The insurance also covers loss through embezzlement, including embezzlement by the management, and through terror acts.
Being an attractive jurisdiction for a global clientele, Liechtenstein cannot and does not want to isolate itself from the world.
Liechtenstein is therefore fully compliant with all relevant regulations when it comes to international cooperation regarding tax matters and anti-money laundering rules. Liechtenstein is not blacklisted by any country or organisation.
Although Liechtenstein is mainly known for its array of esteemed financial services, this sector only contributes about 23% to the GDP of the country (including banks).
Liechtenstein is indeed – surprise! – the most industrialised country in Europe, with 37.9% of the country’s total employment working in industrial enterprises (Switzerland 21.4%, Germany 28.2%).
Liechtenstein is home to some global brands, for example, Hilti, Ivoclar Vivadent or Medixsysteme.
In general, businesses in Liechtenstein are so successful, that the total employment is higher than its total of residents.
In 2017, 38,600 people were employed in Liechtenstein, meaning that the number of employees surpassed the number of residents (38,114) for the first time.
More than 50% of all employed people commute daily into Liechtenstein from Switzerland, Austria and Germany.
With a GDP of more than CHF 195,000 per employed person, Liechtenstein is one of the wealthiest countries in the world.
The average available income per resident of Liechtenstein was CHF 53,662 in 2017.
Personal income of up to CHF 100,000 is taxed by 5%. The highest tax bracket is 8%, for an annual income above CHF 200,000. The corporate tax rate is 12.5%.
Liechtenstein has no intention to increase its tax rates. The explanation of the “Amt für Volkswirtschaft” (in a way equivalent to the Ministry for Economy) is very simple: “We don’t need more tax revenue at all.”
Liechtenstein has and will always be a future-forward-looking country. The latest proof of the Liechtensteiners’ open-mindedness is the initiative of the Princely House to transform the country into a global hub for blockchain and tokenizing, which has been embraced by the parliament and the business world of Liechtenstein with enthusiasm.
The interesting aspect of the new Blockchain Act is that it focuses on blockchain and tokens in general, rather than focusing on cryptocurrencies, which are just one area of application of blockchain technology.
Being aware of the rapid pace of development of blockchain technology and its areas of application, the Act focuses on the term of “transaction systems based on trustworthy technologies (TT systems)”, used for any kind of possible blockchain systems.
After more than three years of preparation, the first reading of the Act passed the parliament vote in June. Following the second reading, the Liechtenstein Parliament approved the Blockchain Act unanimously on October 3.
