The Principality of Liechtenstein neighboring Switzerland is often looked at as the ‘Small Switzerland within Switzerland’ due to its tiny size of only 62 square miles containing a population of 34,300. Liechtenstein is one of the world’s richest countries as it is also regarded as one of the world’s best international financial centres home to a very sound banking industry. Liechtenstein like Switzerland is well known for its neutrality.
POLITICS: on August 15, 2004, H.S.H. Prince Hans-Adam II gave the reign of power to his son, H.S.H. Hereditary Prince Alois as representative. During year 2003 in a national referendum, citizens of Liechtenstein have voted to give the monarch more political powers in the governing of Liechtenstein including the right to veto parliamentary bills. At present, Liechtenstein is not a member of the European Union ‘EU’ but they did join the United Nations in 1990. The close relationship with Switzerland has enabled the Swiss to take full responsibility in the matters of Liechtenstein’s defense. Historically, Liechtenstein established independence in year 1719 with official sovereign state independence obtained in year 1806, a constitution acclaimed in 1921.
ECONOMY: wealthy and stable. The economy is largely dependent on foreign investment and upwards of 13,000 foreign workers who commute to Liechtenstein for work. Liechtenstein is a full member of the European Free Trade Association (EFTA) since 1991 and it also became a member of the European Economic Area (EEA) in 1995. Taxation is basically non-existent and/or at minimal levels. The combination of favorable taxation and bank secrecy has resulted in booming prosperity for Liechtenstein’s financial sector coupled with a highly successful industrialized commercial economy including pharmaceuticals, textiles, chemicals, etc. Liechtenstein earns a great proportion of government revenue in the range of 30 percent from ‘letter box companies’ (nominal address businesses) that take advantage of the country’s attractive incorporation and tax environment. The nation’s value added tax-free status makes Liechtenstein a very popular tourist destination and a shopper’s paradise. Inflation and GDP growth figures are similar to Switzerland, Liechtenstein enjoys balanced fiscal accounts and trade surpluses.
Economic Statistics
GDP is approximately $1 billion US-dollars (USD), GDP/Capita is at $35,000 USD. GDP growth for year 2000 came in at 3 percent. Inflation has year 2001 recorded at 1 percent, 1997 at 0.5 percent. Industry exports are at $2.6 billion Swiss francs (CHF). Unemployment is at 2.2 percent. Service sector is the largest employer at 53 percent. No external debt.
POSITIVE: literacy levels at 100 percent, very low unemployment, the authorities have implemented policies to fight money laundering. CONCERN: limited natural resources, over 90 percent of energy requirements are imported - current high world oil & natural gas prices.
BANKING SYSTEM: Liechtenstein’s very strict bank secrecy laws have allowed it to become one of the world’s premiere tax havens, a highly recommended destination to establish a corporate trust. With an exceptionally high standard of living, Liechtenstein’s banks managed in excess of 103 billion Swiss francs as of year 2003. This tiny nation is considered to be the best banking ‘haven’ in Europe for confidentiality of financial affairs with a very secure and discreet banking & fiduciary industry. The banking industry caters to many in the international arena including many clients from Japan. A currency agreement with Switzerland has enabled three of the five largest banks in Liechtenstein (2002) to be members of the Swiss Banking Association. Liechtenstein law states that the non-payment of taxes is an administration matter as foreign governments are not allowed to investigate.
CURRENCY: ISO symbol ‘CHF’, Swiss franc. At time of review on January 12, 2005, the Swiss franc had an exchange value of 1.1655 CHF to 1 USD. ‘Officially dollarized’ as the Swiss franc (CHF) is national currency for Liechtenstein since 1921. The Swiss franc is currently one of the world’s strongest currencies. The Swiss franc was unofficially introduced on August 31, 1920 within Liechtenstein. By May 26, 1924 the CHF became legal tender. In 1980, a currency treaty was established between Liechtenstein and Switzerland making the Swiss responsible for monetary policy. For further detailed information on the Swiss franc, please read the write-up of SWITZERLAND in this BankINTRO.com currency index. In addition, please also visit the banking region review on SWITZERLAND in OPEN A BANK ACCOUNT section of this BankINTRO.com web site for further Swiss banking information.
UPDATED: January 12, 2005
