Liechtenstein Enacts April 2026 amendment to its Pillar Two Regulation

On April 3, 2026, Liechtenstein enacted an amendment to its Pillar Two GloBE Regulation (LGBl. 2026 Nr. 114).  The measure amends Article 3 of the GloBE Regulation and took effect the day after publication, with first application to tax years beginning on or after 1 January 2026.  It now expressly allows the simplified determination of top-up taxes by reference to six named safe-harbour regimes: the Transitional CbCR Safe Harbour, QDMTT Safe Harbour, Side-by-Side Safe Harbour, UPE Safe Harbour, Substance-Based Tax Incentives Safe Harbour, and Simplified ETR Safe Harbour.

In the previous version of Article 3, Liechtenstein’s ordinance referred only to the Transitional CbCR Safe Harbour and a generic “Permanent Safe Harbour”, and the Transitional CbCR relief was limited to tax years beginning on or before 31 December 2026 and ending no later than 30 June 2028. The amended text replaces that shorter formulation with an explicit list of six safe harbours and extends the Transitional CbCR window to tax years beginning on or before 31 December 2027 and ending no later than 30 June 2029. 

The main Pillar Two impacts

The first and most immediate impact is the one-year extension of the Transitional CbCR Safe Harbour. The OECD’s January 2026 Side-by-Side Package introduced the Simplified ETR Safe Harbour but also extended the Transitional CbCR Safe Harbour to support an orderly transition and to give taxpayers a choice between the old and new simplification routes during a transition period. Liechtenstein has mirrored that extension exactly in domestic law. 

The second major consequence is the domestic availability of the Simplified ETR Safe Harbour. The OECD describes that regime as a permanent simplification designed to reduce compliance burdens materially, with ETR calculated using a simpler approach based on reporting-package income and taxes with minimal adjustments; it is generally available from the beginning of 2027, or from 2026 in certain circumstances. The Side-by-Side Package imposes entry and re-entry criteria, including a requirement that the tested jurisdiction must not have had a Top-up Tax liability in every fiscal year beginning within the preceding 24 months before first election, with similar look-back rules for re-entry after a lapse. Groups that want to preserve future access should be documenting now whether their 2026 and 2027 positions keep that 24-month history “clean.”

The addition of the Side-by-Side Safe Harbour is potentially the most consequential change for cross-border groups with Liechtenstein entities. Under the OECD package, where an MNE group’s UPE is located in a jurisdiction with a Qualified SbS Regime, and the election is made, the Top-up Tax for a jurisdiction is deemed to be zero for IIR and UTPR purposes. The OECD also makes clear that eligibility depends on the Inclusive Framework determining that the UPE jurisdiction has a Qualified SbS Regime and listing that jurisdiction on the Central Record. Liechtenstein’s own consultation materials present this new safe harbour as especially relevant for US-parented groups that are already subject to US anti-deferral rules, although the qualification question remains an OECD-level one rather than something Liechtenstein decides unilaterally. 

The newly listed UPE Safe Harbour provides that where an MNE group has its UPE in a jurisdiction with a Qualified UPE Regime and elects the safe harbour, the Top-up Tax is deemed to be zero for UTPR purposes with respect to constituent entities located in the UPE jurisdiction. However, the same OECD text states expressly that the UPE Safe Harbour has no impact on the operation of QDMTTs, and it also does not switch off IIR or UTPR consequences for constituent entities outside the UPE jurisdiction. 

The inclusion of the Substance-Based Tax Incentives Safe Harbour allows certain qualified tax incentives to be treated as an addition to adjusted covered taxes, subject to a substance cap based on payroll and tangible assets, and it eliminates the Top-up Tax that would otherwise be attributable to those incentives. In other words, the Pillar Two effect of local incentives is no longer binary. For groups using Liechtenstein entities alongside incentive regimes elsewhere, modelling will need to distinguish between incentives that remain ETR-depressive under ordinary GloBE mechanics and those that may be neutralised, in whole or in part, by the SBTI safe harbour.

Notably, the amended Liechtenstein ordinance does not list the Transitional UTPR Safe Harbour from the OECD’s July 2023 Administrative Guidance. The July 2023 OECD guidance limited the Transitional UTPR Safe Harbour to fiscal years beginning on or before 31 December 2025 and ending before 31 December 2026, whereas Liechtenstein’s amending ordinance applies for the first time only to tax years beginning on or after 1 January 2026. From that point onward, the OECD’s January 2026 guidance shifts attention to the new UPE Safe Harbour and Side-by-Side Safe Harbour.