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Economy of Liechtenstein


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Despite (or perhaps because of) its limited natural resources, Liechtenstein is one of the few countries in the world with more registered companies than citizens; it has developed a prosperous, highly industrialized free-enterprise economy and boasts a financial service sector as well as a living standard which compares favourably with those of the urban areas of Liechtenstein's large European neighbours.

Very low business taxes (lowest in Europe)—the maximum tax rate is 20%—as well as easy Rules of Incorporation have induced about 73,700 holding (or so-called 'letter box') companies to establish registered offices in Liechtenstein. This provides about 30% of Liechtenstein's state revenue. Liechtenstein also generates revenue from Stiftungen ("foundations"), which are financial entities created to increase the privacy of nonresident foreigners' financial holdings. The foundation is registered in the name of a Liechtensteiner, often a lawyer.

Recently, Liechtenstein has shown strong determination to prosecute international money-launderers and has worked to promote the country's image as a legitimate finance center. In February 2008, the country's LGT Bank was implicated in a tax-fraud scandal in Germany, which strained the ruling family's relationship with the German government. Crown Prince Alois has accused the German government of trafficking in stolen goods. This refers to its $7.3 million purchase of private banking information illegally offered by a former employee of LGT Group. However, the United States Senate's subcommittee on tax haven banks said that the LGT bank, which is owned by the royal family, and on whose board they serve, "is a willing partner, and an aider and abettor to clients trying to evade taxes, dodge creditors or defy court orders."

Liechtenstein participates in a customs union with Switzerland and employs the Swiss franc as national currency. The country imports about 85% of its energy. Liechtenstein has been a
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