Following the coming into force of Liechtenstein’s tax law of 1st January, 2011, income from intellectual property rights (IP-Box) is subject to a preferential taxation. Patents, trademarks, designs and utility models are all subject to the preferential taxation only if they are registered, and consequently protected, in a domestic, non-domestic or international register. A further requirement for the said preferential taxation is that they were created or acquired on or after January 1st, 2011. Intellectual property rights (IP) which were created or acquired before January 1st, 2011 and also copyright, Know-how and trade names are excluded from the preferential tax regime. The date of entry in the respective register will determine whether the preferential tax regime applies.
The IP-Tax Regime in Liechtenstein
In general, an IP-Company in Liechtenstein must pay corporate income tax annually at a single rate of 12.5% on its taxable income. The foreign permanent establishment profits; rental profits from foreign real estate; dividends and capital gains of an IP-Company in Liechtenstein are not subject to corporate income tax in Liechtenstein. Moreover, when calculating the tax liability of an IP-Company in Liechtenstein, a deduction of 4% is applicable due to the interest deduction on equity capital. It is required that an IP-Company in Liechtenstein must pay at least 1,800 Swiss Francs in corporate income tax each year.
Liechtenstein’s intellectual property rights (IP-Box) tax regime exempts 80% of income from intellectual property rights from tax. This means that after the setting off of the corresponding expenditure, the said income is subject to an effective corporate income tax rate of 2.5%.
Liechtenstein’s 80% tax exemption is calculated on the following basis: the proceeds from the use, realization and sale or transfer of the intellectual property rights are to be deducted from the associated tax-related costs incurred. The writing-off of the intellectual property rights is further to be deducted. This is so even where the said costs have been accrued across several assessment periods.