With the "Futuro" project, Liechtenstein has elaborated a vision for the financial center of the future. Accompanying the project on the future of the financial center is a comprehensive tax reform, which aims to adapt the current tax system to the changed economic and legal framework conditions in Liechtenstein and abroad.
Tax policy is one of the current political topics in Europe, the discussion of which is heavily determined by the tax climate of the country in question. Tax competition is also a hot topic, since various countries have recently carried out tax reforms, in the course of which they have simplified their tax systems or reduced their tax rates. Practice has shown how important tax policy is for the competition among business locations. For quite some time, Liechtenstein has begun tackling a reform of its existing tax law, which no longer meets the demands of international competition and which contains distortions with respect to the taxation of natural persons. "Existing tax law limits the competitiveness of nationally and internationally operating economic agents, leading to unnecessary additional burdens in cross-border trade," Prime Minister Otmar Hasler said, summarizing the situation at the Tax Expert Meeting 2008 at the Hochschule Liechtenstein. The envisaged tax reform aims to reduce these burdens as far as possible and to achieve greater compatibility with foreign countries. The Government also wants the tax reform to fortify Liechtenstein's strategic orientation as an attractive business location and financial center and secure it for the long term. Another goal is to further develop the existing tax system for natural persons, in order to achieve taxation of citizens that is as simple and transparent as possible.
The "Liechtenstein Tax Road Map" adopted the beginning of 2007 cited conformity with European law as one of the key points of tax reform. The Government understands this to mean the incorporation of binding European requirements, so that Liechtenstein will continue to have a competitive, productive, and reliable tax law in the future. Since 2001, the Government has been systematically observing and analyzing the international developments in tax law. The Liechtenstein Dialogue has also initiated a targeted discussion on tax trends at the European and international level, with the participation of experts from policymaking, business, research, and supranational organizations. In all of its reform efforts relating to tax law, the Government is aware that low taxes alone do not entail the attractiveness of a business location. Rather, positive location factors such as a stable economic and legal order must be considered as well. Thanks to its Customs Union with Switzerland since 1923 and its membership in the European Economic Area since 1995, Liechtenstein has additional factors at its disposal in the regional and international competition among locations.
The "Liechtenstein Tax Road Map" determined that the tax reform should be based on the criteria of competitiveness, productivity, and attractiveness, so that the future Liechtenstein tax system should not limit the competitiveness of nationally and internationally operating economic agents any more than necessary. The future tax system should be designed in a nationally and internationally attractive way, but also be productive enough to supply the State with sufficient financial resources and to strengthen Liechtenstein's position in international tax competition.
The criterion of international compatibility requires that the future Liechtenstein tax system not only offer a low level of tax burden, determined individually as a State. Rather, it should also be compatible with the tax systems of other States and create the preconditions necessary to benefit from the advantages and opportunities arising from international efforts to synchronize national tax orders. I.e., it should create preconditions to facilitate the conclusion of double taxation agreements at the appropriate time and the application of EU tax directives to Liechtenstein, such as the Parent-Subsidiary Directive or the Merger Directive.
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