Liechtenstein’s transformation

From the Liechtenstein Declaration to the automatic exchange of information

The political response to the affair came on 12 March 2009, when the government of Liechtenstein published a declaration committing the principality to implement the global standards of transparency and exchange of information developed by the OECD. Liechtenstein undertook to conclude bilateral agreements on exchange of information in tax matters and double taxation agreements to combat tax fraud and tax evasion while declaring its readiness to participate more actively in international efforts. The declaration also affirmed that Liechtenstein would maintain solid and modern legislation on banking client confidentiality and signalled readiness to continue negotiations on an agreement with the EU on fraud prevention.¹ The declaration came one day before Switzerland announced, on 13 March 2009, its own adoption of the OECD standard on exchange of information on request, a sequence that Part I of this book has discussed.

In the following years Liechtenstein concluded a large number of agreements. They included a tax information exchange agreement with Germany of 2009 and a double taxation agreement with Germany of 2011, the Liechtenstein Disclosure Facility with the United Kingdom, which gave British taxpayers a favourable route to regularisation. The bilateral network grew to 32 double taxation agreements and 37 agreements on the exchange of information by 2026.² With Austria, Liechtenstein signed an agreement on 29 January 2013 on the model of the Austrian–Swiss withholding tax agreement. It covered accounts at Liechtenstein banks as well as transparent and non-transparent asset structures such as foundations and trusts, providing for the collection of a one-off settlement payment, a withholding tax on future income and a tax on distributions from foundations. A protocol of 17 October 2016 adapted the agreement to the automatic exchange of information, which began on 1 January 2017. Since then, the agreement applies only to accounts excluded from the automatic exchange and to non-transparent structures.³

The survival of the Austrian–Liechtenstein agreement for non-transparent structures is a detail with practical consequences. The Austrian tax law regime for foundations under Liechtenstein law distinguishes between transparent structures, whose assets are attributed to the founder or the beneficiaries, and non-transparent ones, which are treated as separate taxpayers. The agreement provides a mechanism for taxing the latter, which the automatic exchange of information does not fully cover. For Zurich advisers dealing with Austrian families, the question whether a Liechtenstein foundation is transparent or non-transparent under Austrian law therefore remains relevant, alongside the question of how the foundation’s accounts in Zurich are reported under the CRS.

The Financial Market Authority

The supervision of the Liechtenstein financial centre was reorganised in the same period. The Financial Market Authority, the FMA, began operating on 1 January 2005 as an integrated supervisor for banks, insurance undertakings, investment firms, fund management companies, trustees and other financial intermediaries.⁴ As the supervisor of an EEA state, the FMA participates in the European System of Financial Supervision within the framework adapted for the EEA/EFTA states, in which the EFTA Surveillance Authority takes binding decisions vis-à-vis the Liechtenstein authorities where the European supervisory authorities would do so for EU member states. The FMA’s responsibilities also include supervision under the anti-money laundering legislation and the registration of service providers under the blockchain law discussed below.

The FMA and FINMA cooperate closely. The currency treaty gives the FMA a defined role in relation to the Swiss monetary legislation applicable in Liechtenstein. The cross-border group structures of the Liechtenstein banks, for their part, require continuous coordination between the two supervisors. Where a Liechtenstein banking group has a subsidiary in Zurich, FINMA supervises the Swiss bank and the FMA the group, with the exchange of information governed by the relevant provisions of the Financial Market Supervision Act and the corresponding Liechtenstein rules. For clients, this cooperation is invisible, but it explains why the two financial centres can operate in such proximity without regulatory friction.

The blockchain act of 2020

Liechtenstein’s most visible regulatory innovation of recent years is the Gesetz über Token und VT-Dienstleister, the Token and Trustworthy Technology Service Providers Act (TVTG), which entered into force on 1 January 2020. The law introduced a civil law framework for tokens and a registration regime for service providers on trustworthy technology systems, a term that covers blockchain and other distributed ledger technologies. The FMA registers the service providers and supervises them on an ad hoc basis. Its supervision covers compliance with anti-money laundering obligations under the FATF recommendations, while the TVTG as such lies outside the classical financial market regulation and registered service providers are not financial intermediaries unless they conduct other licensed activities.⁵

The core idea of the TVTG is the so-called token container model. A token is understood as information on a trustworthy technology system that can represent rights of any kind, from claims and membership rights to rights in rem. The law defines the civil law effects of a transfer of the token on the represented right. This approach, which Liechtenstein adopted before the Swiss legislature enacted the DLT amendments described in Part J of this book, attracted a number of projects in the field of crypto-assets and Digital Assets to Vaduz. According to the FMA’s overview published in 2025, 30 companies were registered for a total of 69 services under the TVTG.⁶ Since MiCAR became applicable in the EEA, crypto-asset service providers in Liechtenstein require a MiCAR licence for the activities covered by the regulation, while the TVTG continues to govern the civil law of tokens and those services outside MiCAR. For Zurich, the Liechtenstein regime is a neighbouring alternative to the Swiss DLT framework with the added advantage of EEA market access.

Insurance wrappers

A further element of the Liechtenstein offering that connects directly to Zurich is life insurance used as a wrapper for investment portfolios. Part E of this book has described the Zurich insurance industry and the use of life insurance in private wealth planning. Liechtenstein insurers, operating under the EEA passport and the Solvency II regime, specialise in unit-linked life insurance policies whose underlying assets are held in a separate account at a custodian bank, often in Zurich or Vaduz, and managed by an asset manager chosen by the policyholder within the limits of the insurance law. For a German or Austrian policyholder, such a policy can offer tax deferral and advantages in succession planning under the law of his country of residence, provided that the conditions of the domestic tax law on the recognition of life insurance are met.

The FMA’s figures show the weight of this business. Of the premiums collected by Liechtenstein insurers in 2024, life insurance accounted for 2.36 billion francs, and Germany was the second-largest cross-border market after Switzerland.⁷ For the Zurich financial centre, the insurance wrapper is a product that Swiss insurers cannot easily offer to EU clients without a subsidiary in the EEA, and that Zurich banks and asset managers therefore frequently access through Liechtenstein partners. The Zurich bank remains the custodian and often the asset manager, the Liechtenstein insurer provides the policy and the EU market access, and the client’s tax adviser in Germany or Austria confirms the tax treatment. This division of labour is a small but characteristic example of how the DACH market functions as an integrated system across three jurisdictions.

Notes

1. Government of the Principality of Liechtenstein, “Erklärung Liechtensteins”, 12 March 2009, https://www.regierung.li/files/attachments/090312_OECD_LIE-Declaration_de_636254429024591828.pdf. ↩
2. Liechtensteinische Landesverwaltung, Steuerverwaltung, “Übersicht DBA und TIEA”, as at 21 July 2026, https://llv.li/serviceportal2/amtsstellen/steuerverwaltung/int-abkommen/int_uebersicht_dba_tiea.pdf: TIEA with Germany signed on 2 September 2009 (in force 28 October 2010), DTA with Germany signed on 17 November 2011 (in force 19 December 2012), TIEA with the United Kingdom signed on 11 August 2009. ↩
3. BMF, “Steuerabkommen mit der Schweiz und mit Liechtenstein”, https://www.bmf.gv.at/themen/steuern/internationales-steuerrecht/abkommen-aut-ch.html. ↩
4. Wikipedia, “Financial Market Authority (Liechtenstein)”, https://en.wikipedia.org/wiki/Financial_Market_Authority_(Liechtenstein), which states that the FMA began operating on 1 January 2005 as an independent, integrated supervisor of banks, insurance undertakings and intermediaries, pension funds, investment companies, asset management companies and other financial intermediaries. Its legal basis is the Financial Market Supervision Act (FMA Act): FMA, “Legal foundations of the FMA”, https://www.fma-li.li/en/fma/organization/legal-foundations-of-the-fma. ↩
5. FMA, “Gesetz über Token und VT-Dienstleister (TVTG)”, https://www.fma-li.li/en/supervision-regulation/fintech/tvtg. The page notes that recent amendments have made the TVTG and the EU Regulation on markets in crypto-assets (MiCAR) complementary regimes with distinct fields of application. ↩
6. FMA, Finanzplatz Liechtenstein, edition 2025, https://www.fma-li.li/fma-li/documents/publikationen/finanzplatz-liechtenstein/fma-broschuere-finanzplatz-liechtenstein-2025.pdf. ↩
7. FMA, Finanzplatz Liechtenstein, edition 2025 (note above). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.