Liechtenstein Economy

Liechtenstein Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax system

Basic data

In 2021, the Liechtenstein economy was also significantly affected by the strong so-called catch-up effects and the dynamic global economic recovery, and already in the first half of 2021 it recorded a significant improvement. Check ebizdir for economical facts of Liechtenstein.

The turnover of 25 selected larger Liechtenstein companies increased by 17% in the first half of 2021 compared to the same period in 2020. It is also encouraging that the export of goods also recorded a rise again in the first half of 2021, by 39.5%. For 2021, the industrial sector in particular showed stable development, with turnover increasing by 23% in the first half of 2021. In the same year, the services sector showed a slight increase (+3%); however, the turnover of selected larger providers of financial services fell by 6%). In 2021, the unemployment rate averaged 1.6%, which is 0.3% lower than in 2020 (1.9%). In the same year (2021), the average unemployment rate for persons with Liechtenstein citizenship was 1.2%, for foreigners 2.4%. In December 2021, the average annual inflation was +0.6%. This increase compared to 2020 was mainly due to higher prices of petroleum products and higher rents for apartments. Liechtenstein is one of the few countries in the world that has no national debt.

In 2020, goods worth a total of CHF 2,861 million were exported from Liechtenstein (excluding trade with Switzerland). Exports thus fell by 16.4% compared to 2019, or CHF 561 million. Imports of goods to Liechtenstein in 2020 amounted to CHF 1,651 million. Compared to 2019, it decreased by 17%, or CHF 339 million (excluding trade with Switzerland).

Liechtenstein is a stable, broadly diversified economic location with a high share of industrial production (the industrial sector accounts for over 40% of gross value added) spread over a very small area. The country is home to more than 5,100 active companies offering more jobs than the population of Liechtenstein. In addition to a few large companies, the backbone of the Liechtenstein economy consists mainly of a number of small and medium-sized enterprises. The most important industries in Liechtenstein are engineering, machinery and equipment manufacturing, precision equipment manufacturing, dental and food industries, and in all these areas the country is a guarantee of the production of high-tech products of the highest quality. The principality is also an advanced and innovative financial center; financial services create about 1/4 of the country’s annual value added. The national economic importance of the originally most important sector of agriculture is marginal. The same is true of tourism. Its most important export items are metals, machinery and equipment, electronics and fine mechanical products. Liechtenstein imports metal products, automobiles, and machinery and equipment. On 01/01/2020, the Blockchain Act came into force, making Liechtenstein the first country in the world to officially use cryptocurrencies. Among other things, the well-known cryptocurrency exchange Bittrex moved to the country in 2019.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) – 2.4 – 10.1 ON ON ON
GDP/population (USD/PPP) ON ON ON ON ON
Inflation (%) ON – 0.7% 0.6 ON ON
Unemployment (%) ON 1.9 1.6 ON ON
Export of goods (million CHF) ON 2,861 ON ON ON
Import of goods (million CHF) ON 1,651 ON ON ON
Trade Balance (Billion USD) ON ON ON ON ON
Industrial production (% change) ON ON ON ON ON
Population (thousands) 0 39,062 39,315 ON ON
Competitiveness ON ON ON ON ON
OECD export risk ON ON ON ON ON

Source: Statistical Office of Liechtenstein

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) surplus 3.7% (figure for 2019)
Public debt (% of GDP)
Current account balance (billion USD) ON
Taxes 2022
AFTER 12.5%
F.O 1% min.
8% max.
VAT 7.7% standard rate
2.5% reduced rate 3.7
% special rate

Liechtenstein’s public finances are made up of the state budget and the budgets of eleven municipalities. Revenues are generated on the one hand by various taxes, on the other hand by income from capital assets and fees. On the expenditure side, in addition to administrative costs, the areas of education and social care are traditionally of great importance. Liechtenstein has no public debt, making it one of the few debt-free countries in the world. The reason is primarily a successful economy, as well as a conscious and disciplined handling of available resources. In addition, the country’s fiscal discipline results in high budget reserves. Thus, the public sector in Liechtenstein has great capital strength. The necessary stability is ensured by political continuity, stability of the social, legal and economic system, liberal economic policy and the Swiss franc as legal tender.

Expenditures and revenues of the state sector
In 2019, the surplus of the Liechtenstein state budget amounted to 3.7% of GDP, or CHF 24million (positive financial balance). This is the highest surplus since the beginning of recording financial statistics in 2011. In 2019, consolidated state expenditures increased by 2.0% of GDP, or by CHF 27 million compared to 2018 to CHF 1,578.3 million. Non-consolidated state revenues in 2019 amounted to CHF 1,82 million, i.e. compared to 2018, they increased by CHF 7million, or by 4.6% of GDP.

(Source: Statistical Office of Liechtenstein – most up-to-date data).

Banking system

The banking sector is one of Liechtenstein’s most important industries and an important employer. The main activity of Liechtenstein banks is asset management for private customers and asset management. Thanks to Liechtenstein’s membership in the European Economic Area, its banks can fully enjoy the benefits of the free movement of services within the single European internal market. Some banks are also active outside Europe through subsidiaries, branches or representative offices.

According to the Liechtenstein Statistical Office, the total balance sheet total of 13 banking institutions operating in Liechtenstein was CHF 7billion as of 12/31/2020. Compared to 2019, the balance sheet total increased by CHF billion, or by 3.1%. The result of the ordinary business activity of the banks in 2020 was 30million CHF, which corresponds to a decrease of 11.8% compared to 2019. In the past financial year (2020), banks in Liechtenstein recorded a net inflow of new money of billion. CHF, as of 31 December 2020, the value of assets under management of bank clients in Liechtenstein was CHF 179.2 billion.
At the end of 2020, banking institutions including subsidiaries managed (consolidated) client assets amounting to CHF 36billion. A net inflow of new money of CHF 17.7 billion was reported.

The three largest Liechtenstein banking groups recorded a net new money inflow of CHF 17.5 billion in the first half of 2021, compared to a net new money inflow of CHF billion in the first half of 2020. Client assets managed by these three banking groups reached CHF 416 billion in mid-2021, representing an increase of 15.6% over the previous year’s (2020) level.

The largest bank in Liechtenstein is LGT Bank, which has been owned by the princely family for more than 80 years. It has a very high level of financial stability and offers its customers access to a global network and a wide range of services. Another important bank in Liechtenstein is BENDURA BANK AG. It offers tailor-made financial services especially for mobile customers. It provides investment advice and asset management. It also offers transaction banking to its key customers. Liechtenstein’s oldest financial institution is Liechtensteinische Landesbank AG (LLB), the majority of whose shares are owned by the state. The LLB Group offers its clients wealth management, asset management and fund services. Bank Alpinum AG is an independent private bank whose main activity is offering private banking services.

Tax system

Liechtenstein’s tax system is simple, transparent and internationally compatible. Tax rates are set at a level that makes Liechtenstein a tax-attractive and competitive destination. The total tax revenues of the country and municipalities reached a total of CHF 1,271 million in the financial year 2020 (the most recent figure), which is by 32.7% or CHF 313 million more than in 2019. This significant increase was due to the extraordinary income from profit tax, which was the most profitable type of tax in 2020. Increases were also recorded in property tax and income tax. On the other hand, revenues from value added tax had a downward trend.

Individuals with permanent residence in Liechtenstein are subject to wealth tax and income tax. In addition, the land tax and the relevant municipal tax are collected from them. The land tax rate is progressive and has eight levels, with the highest rate being 8% (taxable income over CHF 200,000 per year), the lowest rate being 1% (taxable income from CHF 15,001 to 20,000 per year). Municipal tax is collected by means of a surcharge to the calculated land tax. This surcharge varies between 150% and 250% of the land tax and each municipality sets it annually at its own discretion. The total maximum tax burden for a natural person is 22.4%. For non-residents, Liechtenstein income from employment, business profits and profits attributable to immovable property located in Liechtenstein are taxed.

Companies that have their headquarters in Liechtenstein, or actually carry out their business there, are considered resident for tax purposes. Legal entities are subject to profit tax in Liechtenstein at a flat tax rate of 12.5%, with a minimum income tax of CHF 1,800. Profit tax is payable annually, and its assessment base is set for the calendar year, or tax year. Private property structures as well as special property dedications without a natural person are not subject to income tax; they only have to pay a minimum income tax of CHF 1,800.

Liechtenstein VAT corresponds to Swiss VAT, but is collected and deducted in Vaduz. Liechtenstein’s VAT law recognizes three tax rates: the standard rate is 7.7%, certain types of goods (food, books, magazines or medicines) and services are subject to a reduced rate of 2.5%, in hotels and accommodation services a special tax rate of 3.7% applies.

In 2021, no significant changes are expected in Liechtenstein’s tax system.

Liechtenstein Economy