Real estate of Liechtenstein

Situated in the Rhine Valley in the Alps in Central Europe, Lienchtenstein is divided into Balzers, Eschen, Gamprin, Mauren, Planken, Ruggell, Schaan, Schellenberg, Triesen, Triesenberg, and Vaduz. The real estate industry of Liechtenstein, as those in other European countries is flourishing.

The entire western border of this landlocked country is lined by River Rhine. The eastern part of the country is located at higher altitude and in spite of the alpine location; the climate of Liechtenstein is rather mild, due to southern winds.

Owing to its small domestic market, Liechtenstein is impelled to attract overseas investors to sustain its economy. Consequently, there is a heavy demand for real estate assets among overseas and local developers.

Profits attained through the sale of real estate property in Liechtenstein are subject to a special tax called real estate profits tax which is in no way related to general property and income or capital and profits taxes. If a profit is attained through the sale of real property located in Liechtenstein, the seller must pay real estate profits tax. Sales include transfers through foreclosure sales or expropriation. Real estate profits are the amount by which the proceeds of the sale exceed the investment costs (purchase price and expenditures increasing value).

In the case of sales pursuant to a contract, the sales profits equal the purchase price including all further services of the buyer. 1500 Swiss francs may be deducted from the real estate profits. The tax rate of the real estate profits tax fundamentally depends on the duration of the seller’s ownership of the real property before the sale: the longer the property belonged to the seller, the lower the tax rate. The minimum and maximum tax rates of the real estate profits tax are:

• For a duration of ownership over 10 years 3,24% and 17,01%
• For a duration of ownership between 5 and 10 years 4,32% and 22,68%
• For a duration of ownership between 3 and 5 years 5,40% and 28,35%
• For a duration of ownership up to 3 years 6,48% and 34,02%

(Source: www.liechtenstein.li)