Capital contributions and capital increases of Liechtenstein-based companies may be subject to the Swiss issuance duty (Emissionsabgabe) of 1% – a fact that is often overlooked. The reason for this lies in the customs treaty with Switzerland, which extends the application of the Swiss Federal Stamp Duty Act (StG) to Liechtenstein. Failure to report qualifying events within the required timeframe can result in retroactive charges, late interest, and liability consequences. This article outlines the taxable events and highlights key points to consider, particularly in the context of corporate restructurings and recapitalizations.
Scope of the Issuance Duty in Liechtenstein
Due to the Customs Treaty between Switzerland and Liechtenstein dated 29 March 1923, which integrates Liechtenstein into the Swiss customs area, the Swiss Federal Stamp Duty Act (StG) also applies in Liechtenstein (including issuance duty, transfer duty, and insurance premium duty). These duties are levied by the Swiss Federal Tax Administration (FTA), which transfers the net proceeds to Liechtenstein after deducting administrative costs.
According to Article 5 StG, issuance duty is levied on the creation and increase of the nominal value of equity rights in domestic (CH and LI) companies (AGs, GmbHs, cooperatives, etc.). Contributions made by shareholders without consideration are treated as equivalent to the creation of equity rights. Therefore, the issuance duty applies both to open capital increases and to shareholder contributions.
Taxable events must be reported to the FTA proactively within 30 days, using the appropriate form. Supporting documentation must be submitted, and the duty paid at the same time. Under international administrative assistance rules, relevant documents are exchanged between the two jurisdictions. Alternatively, the form and payment may be submitted to the Liechtenstein Tax Administration, which will forward them to the FTA.
Proper Treatment of Shareholder Contributions – What Companies Need to Know
Contributions are payments made by shareholders to a company without receiving any consideration in return, and without increasing the company’s registered capital. This includes debt waivers, capital surcharges (Agio), and non-repayable capital injections (à-fonds-perdu). Also classified as contributions are shareholder loans granted to distressed companies and waived at a later point in time.
Such contributions are often used to restructure companies or to finance not-yet-profitable ventures. In Red Leafs Tax AG’s experience, these contributions are frequently misclassified or not properly declared in Liechtenstein. Contributions can be injected quickly and informally without the need for statutory amendments or commercial register filings.
Thresholds, Deadlines, and Pitfalls at a Glance
For formal capital increases, there is a duty exemption threshold of CHF 1 million. No such exemption exists for shareholder contributions. However, in restructuring cases, a special exemption of up to CHF 10 million may apply – provided that existing losses are definitively written off. This restructuring exemption may be used once (for restructurings from 2009 onwards), in one or more instalments. The exemption only applies to contributions that cover actual, written-off losses. Even when an exemption applies, the contribution must still be reported to the FTA using Form number 4.
The tax liability arises at the time the contribution is made and is due 30 days thereafter. For capital increases, the decisive date is that of the commercial register entry. The company is liable for the issuance duty.
Late interest accrues automatically from the due date at the current rate of 4%, even without a formal reminder. The duty claim expires five years after the end of the calendar year in which it arose. The duty amounts to 1% and is calculated based on the contributed amount in the case of shareholder contributions
Conclusion
Due to the customs treaty between Liechtenstein and Switzerland, both capital increases and shareholder contributions to Liechtenstein (and Swiss) companies are subject to a 1% issuance duty. In restructuring cases, a special exemption of up to CHF 10 million applies to contributions and debt waivers, provided losses are definitively written off. To avoid late interest and liability risks, qualifying events must be duly and timely reported. Liechtenstein and Switzerland exchange relevant information under applicable data sharing agreements.
Published in the “Steuern spezial” section of Wirtschaftsregional on 10 February 2023.
