Liechtenstein government approves tax treaty with Switzerland

A tax treaty between Liechtenstein and Switzerland has been approved by the Liechtenstein government and transmitted to Parliament for consideration, the Liechtenstein government announced March 9.

The government said that the treaty, which would replace a 1995 agreement between the countries, has also been approved by the Swiss Federal Council and is expected to enter into force in early 2017.

The tax treaty reduces to zero Swiss withholding tax on interest for Liechtenstein residents, the government said. Zero withholding tax will also apply to dividends from significant holdings in corporate groups and to dividends paid to pension funds in Liechtenstein.

Swiss withholding tax on portfolio dividends and dividends paid to natural persons would be reduced from 35 percent to 15 percent.

The agreement also addresses the tax treatment of cross-border commuters.