The Liechtenstein Persons and Companies Act 1926 (PGR) is one of the cornerstones of the rapid economic development of the country. Supplemented by the Law Concerning Trust Enterprises (1928), it led to the establishment of numerous domiciliary and holding companies, incidentally making Liechtenstein a pioneer as an offshore centre. The aim of the legislation was to create income for Liechtenstein by introducing all the forms of undertakings known and proven in foreign legislation. Even though Liechtenstein was neutral during the First World War, the economic consequences of it nevertheless proved to be disastrous. With the collapse of the Habsburg Empire, the Austrian crown, the currency used in Liechtenstein lost its value. The company legislation was an ideal way of attracting new and stable money to Liechtenstein. Due to the absolute political stability and the solid economic growth in all sectors supported by the enormous growth of the offshore services sector, Liechtenstein rivals Switzerland for stability and enjoys a more secure and discreet banking and fiduciary industry.

The Persons and Companies Act was amended during 1980 to prevent any abuse and misuse of the act. Basically, a central feature of the legislation remains the legal entities registered in Liechtenstein, on the Public Register as Commercial Register that have their domicile in the country, but are exclusively active abroad. These entities include companies with the objective of investment management, trusts, trust enterprises and foundations, which allow anonymity for the financial beneficiary. Liechtenstein is the only country of Continental Europe to have dealt with the institution of the trust (common law trust) by statute law.

The issue of international money laundering also affected Liechtenstein. To combat any misuse of Liechtenstein as a financial services centre new legislation was passed. The due diligences laws are based on internationally accepted know your client principles. The control and reporting duties of all financial intermediaries ensures an exclusion of questionable transactions. The application of EU law to certain entities has also promoted a wider acceptance of Liechtenstein as a base for offshore and onshore financial and corporate services.) Examples of Liechtenstein entities and typical applications

The limited company by shares (AG/Ltd.)

The limited company by shares (AG/Ltd.) structured as an offshore company has a minimum formation capital of CHF 50'000.- which has to be fully paid in. The minimum annual capital tax is CHF 1'000.-. Typically the AG or Ltd. is being used for commercially active companies who require a certain degree of recognition and substance in order to be accepted by third parties when conducting international business transactions. However, the AG or Ltd. is also used as a holding vehicle for underlying companies or other assets.

It should not be forgotten that Liechtenstein offers also the onshore AG or Ltd. which pays a very modest tax compared to other European countries but at the same time has full access to the European Union and its member countries. Properly structured an onshore AG or Ltd. will have no problems when dealing directly with companies in those jurisdictions. Only one of the increasingly interesting business areas are IT services (ASP etc.) provided from a server located in Liechtenstein and maintained by a Liechtenstein company.

The commercial and non-commercial Anstalt

The commercial Anstalt (Establishment) structured as an offshore entity can conduct all "ordinary" business activities. Its minimum formation capital is CHF 30'000.- and its minimum annual capital tax is CHF 1'000.-. The Anstalt has no share capital but the Founder's Rights which cannot be divided into more than one part. Typically the commercial Anstalt is used as a commercial company where the additional capital is not required or there is only one party as owner of the company. The non-commercial Anstalt can invest and hold its own assets and might be sufficient as an entity to hold private assets such as a stock or bond portfolio and/or property.

The deposited Family Foundation and Trust Settlement

Although there are various types of foundations that can be used in Liechtenstein the deposited family foundation is probably the most popular one. As a non-commercial entity it is usually used to hold various types of private assets of the founder or his family for the benefit of named beneficiaries or a given class of beneficiaries. The security, confidentiality, infrastrustructure and central location of Liechtenstein make it an ideal place for administering and managing such structures.

In having a codified Trust Law Liechtenstein is arguably an anomaly amongst all major offshore jurisdictions. However, the Liechtenstein Trust Settlement has attracted considerable interest and is still widely used by clients who prefer to have a Trust to the Foundation.