Liechtenstein Publishes Draft Global Minimum Tax Law

On March 29, 2023, Liechtenstein published draft legislation for the implementation of the Pillar Two GloBE Rules.

A new GloBE Act is to be enacted which will provide for:

 – the Income Inclusion Rule (IIR);

 – the Under-Taxed Payments Rule (UTPR); and

 – a Qualified Domestic Minimum Top-Up Tax (QDMTT).

The IIR and QDMTT are to apply to in-scope MNE groups for accounting periods beginning on or after January 1, 2024. The UTPR is to apply to accounting periods beginning on or after January 1, 2025.

Liechtenstein takes a similar approach to Switzerland, with Article 2(1) of the Draft Law providing that the GloBE Model Rules are directly applicable.  The Draft Law therefore transposes the OECD Model Rules directly into domestic law via a static reference.

Article 2(2) of the Draft Law provides that the model rules are to be read so that Liechtenstein is the implementing jurisdiction wherever there is placeholder text.

The Commentary on the Model Rules, Safe Harbours Guidance, the Administrative Guidance and other relevant OECD guidance are also to be directly applicable in Liechtenstein. An Ordinance to accompany the GloBE Law is to make them legally binding.

As Liechtenstein is member of the EEA, large domestic groups are also be included in the scope of the GloBE Rules.

Given the standard corporate income tax rate in Liechtenstein is 12.5% (under Article 61 of the Law on State and Municipal Taxes), domestic entities/PEs of foreign MNE groups and large domestic groups are likely to be subject to top-up tax (unless there are significant differences between domestic and GloBE treatment).

The Draft Law is subject to a consultation until 2 June 2023, with final legislation to be sent to Parliament at the beginning of September 2023.

We look at some of the key aspects of the Draft GloBE Law below. 

The draft legislation is available at: