On 5 and 6 November 2026, the annual Liechtenstein Tax Conference was held at the Rathaussaal in Vaduz. Organised by Exchange Ideas, the conference brought together practitioners from Liechtenstein, Switzerland, Germany, Austria and other countries to discuss current tax developments and their implications for Liechtenstein asset structures.
The opening sessions focused on recent changes to Liechtenstein tax law, including the real estate capital gains tax, revocable asset structures and restructurings between Liechtenstein and Switzerland. Over the two days, the programme covered a broad range of topics, from the reform of Liechtenstein trust law, Pillar Two and the taxation of Liechtenstein trusts to estate and real estate structures, the Swiss securities transfer tax, private label funds and the use of artificial intelligence in tax practice. Global mobility and international relocations were also on the agenda.
Red Leafs Tax contributed a technical session of its own together with LeitnerLaw Rechtsanwälte: Michael Abegg (Red Leafs Tax) and Oliver-Christoph Günther (LeitnerLaw Rechtsanwälte) presented on the Austrian rule denying the deduction of interest paid to low-taxed group entities and its consequences for Liechtenstein structures. After setting out the legal framework and documentation requirements, they worked through case studies showing which planning options are available in practice.
Key Observations
- Since 2026, Austria has applied a low-taxation threshold of 15%. With Liechtenstein’s corporate tax rate at 12.5%, interest paid to Liechtenstein group entities is therefore generally non-deductible.
- The rule affects holding and financing companies as well as opaque (non-transparent) family foundations that grant loans to Austrian group companies.
- The Austrian Federal Finance Court (BFG) has held that the denial rule infringes the freedom of establishment and has allowed the deduction where the interest is at arm’s length and there is no abuse. A decision by the Supreme Administrative Court (VwGH) is still pending.
- Anyone converting a receivable into equity by way of a debt waiver should bear in mind that Liechtenstein and Austria treat this step differently for tax purposes.
Conclusion
For Liechtenstein asset structures holding interests in Austria, the non-deductibility rule has been a practical issue rather than a theoretical risk since 2026. Until the Supreme Administrative Court has ruled, we recommend documenting carefully both the arm’s length terms and the business rationale of each financing arrangement and keeping affected tax assessments open. Whether a conversion into equity makes sense can only be assessed by looking at both jurisdictions together, given that each treats the individual steps differently for tax purposes.
