Neatly sandwiched between Switzerland and Austria, the uncommonly beautiful Principality of Liechtenstein is the 6th smallest independent country in the world. From north to south, the entire nation is just 24km (15 mi) long and has a population of around 38,000 people – 5,000 of whom reside in the capital city of Vaduz.
Despite its size, Liechtenstein punches above its weight in many respects. It has more registered companies than citizens for example, and is seen as an increasingly attractive investment centre in the heart of Europe – not least for its investment centric taxation policy. The Liechtenstein of today is a highly prosperous, industrialised and free-enterprise economy. Taking Gross Domestic Product (GDP) into account, The Principality has a per capita income of about $100,000, a corporate flat tax of 12.5 percent, and an income tax of just 1.2 percent.
“The Principality has a per capita income of about $100,000
Now well-known as a banking and financial hub, Liechtenstein is home to a specialised and stable financial centre with strong international connections. It is supervised by a stringent monitoring authority and financial services form the second-largest economic sector in Liechtenstein after general industry.
Banks are the main player in the financial services sector, but Liechtenstein is also an attractive location for insurance companies, asset management firms, funds and trusts. In total around 5000 people are employed in the financial services sector, which corresponds to 16 percent of the country’s workforce.
Liechtenstein is a member of the European Economic Area (EEA) and thus enjoys full freedom to provide services in all countries of the European single market. Thanks to Liechtenstein’s close neighbourly economic relationship and the Customs and Currency Treaty with Switzerland, the Principality’s financial intermediaries also enjoy privileged access to the Swiss economic area.
“…companies based in Liechtenstein place emphasis on creating high-tech products of the finest quality rather than on cheap mass production
Outside of the financial arena, traditional industries are well represented in The Principality. Machinery and equipment manufacturing, plant construction, precision instruments, dental technology and the food industry are the main pillars, with a large proportion of the goods and services produced in the country destined for export. Throughout all these sectors, companies based in Liechtenstein place emphasis on creating high-tech products of the finest quality rather than on cheap mass production.
Liechtenstein is home to highly qualified workers from over 100 countries. The high level of training and education as well as the attractive labour market are the basis for motivated and well-trained employees. Foreign workers are an intrinsic part of Liechtenstein’s economy, with 52% of the country’s workforce lives abroad and commutes to work each day. Bureaucracy is kept to a minimuim when it comes to employing new members of staff from over the border.
“52% of the country’s workforce lives abroad and commutes to work each day
Around 40% of employees in Liechtenstein work in the industrial sector. Industry, combined with manufacturing, produces 37% of the countrys annual gross value added. Many industrial firms based in Liechtenstein operate in highly specialised niche markets, while many have become global leaders in their respective fields thanks to intensive research and development.
In 2016, Standard & Poors once again confirmed the AAA rating that Liechtenstein has had for many years and underlined the countrys stable outlook. The full Standard & Poors report on Liechtenstein is available for viewing here.