Conditions for Liechtenstein Foundations, Establishments and Trust Enterprises to apply double taxation agreement between Switzerland and Liechtenstein

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The double taxation agreement between Switzerland and Liechtenstein (DTA CH-LI ) is applicable since 1 January 2017. To benefit from the agreement, an entity or individual has to be resident in one or both of the contracting states. The term “resident” requires closer inspection when used in connection with a Foundation (Stiftung), Establishment (Anstalt) or Trust Enterprise (Trust reg.) according to Liechtenstein law.

General considerations

According to the DTA CH-LI, a resident of a contracting state may be either an individual or other person (company) with domicile or place of effective management situated in its territory.

The term “company” includes all legal persons (corporations) that are treated as a corporate body for tax purposes and includes in principle the Liechtenstein Foundation, Establishment and Trust Enterprise. These entities are entitled to apply the DTA CH-LI if they meet the following conditions:

Foundations with a Swiss settlor or beneficiaries

The protocol to the DTA CH-LI lists four criteria that need to be cumulatively fulfilled for a foundation with a Swiss settlor or Swiss beneficiaries to be considered as resident:

    • The foundation is irrevocable, i.e. the settlor has not reserved the right in the formation documents to revoke the foundation.
    • The settlor has not reserved the right to change foundation documents.
    • Neither the settlor nor a related party to the settlor have the right to give instructions to the foundation council.

The beneficiaries have no legal claim to payments/benefits from the foundation.

These criteria constitute minimum requirements. Swiss cantons may establish additional criteria for determining residency based on their own legal practice.

Foundations without a Swiss settlor or beneficiaries

Based on a mutual agreement between Switzerland and Liechtenstein, the aforementioned criteria for determining tax residency are not applicable for foundations without a Swiss settlor and without Swiss beneficiaries. The conditions for such foundations to be considered resident are as follows:

  • The foundation is subject to unlimited tax liability in Liechtenstein (i.e. is not subject only to minimum taxation, see below).
  • The foundation is irrevocable (i.e. the foundation is irrevocable based on Liechtenstein rules and legal practice).
  • The structure does not qualify as a tax-abusive structure based on the provisions of the DTA CH-LI.

If the settlor of the foundation has passed away, the foundation is generally considered resident provided that the beneficiaries do not have the right (based on the foundation documents) to give instructions to the foundation council or have a legal claim on payments/benefits from the foundation.

Establishments and Trust Enterprises

Liechtenstein Establishments and Trust Enterprises are highly flexible legal forms. They may be set up similar to a Foundation or similar to a corporation.

According to the protocol to the DTA CH-LI, the conditions for Foundations to be considered resident are applicable mutatis mutandis to Establishments and Trust Enterprises that are similar to Foundations (see criteria described above). Establishments and Trust Enterprises that are set up similar to a corporation are however in principle considered as resident and thus able to apply the DTA CH-LI.

Distinguishing between corporate entities and foundation-like entities is not easy since the criteria are not yet clearly defined. Tax authorities and courts of law will have an important role in laying down the guidelines. Distinctive features for the qualification are, among others, the existence of shares, the possibility of the settlor or trustor to exercise influence, and the rights of potential beneficiaries.

Minimum taxation

Persons and entities that are subject solely to minimum taxation in Liechtenstein are not considered as resident based on the DTA CH-LI. This means in particular that entities benefiting from the private wealth structure regime may not apply the DTA CH-LI.


The conditions agreed between Switzerland and Liechtenstein regarding the definition of residence of Foundations, Establishments and Trust Enterprises correspond largely to the existing Swiss legal practice. Although the rules are seemingly clear, an interpretation of the rules may be necessary in individual cases to reflect the situational factors.

With regard to existing structures, we would recommend checking the residence of the entities based on the rules of the DTA CH-LI and, if necessary, taking the necessary measures to qualify as resident. In view of the future setup of Foundations, Establishments and Trust Enterprises, it would be advisable to have the residency confirmed by the tax authorities with a tax ruling.


Martin Meyer
PwC | Director
Office: +41 58 792 42 96
Mobile: +41 79 348 36 13
PricewaterhouseCoopers GmbH
Austrasse 52 | Postfach | FL-9490 Vaduz



Yves Stadler
PwC | Manager
Office: +41 58 792 74 55
Mobile: +41 76 570 05 09
PricewaterhouseCoopers AG
Vadianstrasse 25a | Neumarkt 5 | 9001 St. Gallen

Published by

Martin Meyer

PwC Austrasse 52, Postfach, 9490 Vaduz, +41 58 792 42 96.

Martin leads the Private Wealth and Financial Services Practice in Liechtenstein and St. Gallen. He is a certified Swiss tax and Liechtenstein trustee expert. He has considerable project experience with setting up international private wealth structures, investment funds and investment structures for real estate. He is working with a wide range of investment, private, retail and regional banks as well as with life and non-life insurance companies and banking service providers.