Liechtenstein – Transfer Pricing (2025)

Legal framework and scope

The domestic legal basis for applying the arm’s length principle in Liechtenstein is provided by Article 49 of the Tax Act in connection with Article 31b of the Tax Ordinance. These provisions form the statutory foundation for valuing transactions between related parties and with permanent establishments. The Tax Act explicitly refers to international practice, in particular the OECD Transfer Pricing Guidelines (TPG), as the interpretive framework for the arm’s length principle in transactions involving related parties and permanent establishments.

Arm’s Length Principle and the role of the OECD Guidelines

Liechtenstein requires application of the arm’s length principle and expressly mandates that taxpayers apply the current version of the OECD Transfer Pricing Guidelines when determining transfer prices for transactions with closely related persons and permanent establishments, pursuant to Article 31b paragraph 1 of the Tax Ordinance. Consequently, the OECD TPG serve as the primary interpretive source for the arm’s length principle under Liechtenstein domestic law.

Definition of related parties

The domestic definition of closely related persons is set out in Article 31a of the Tax Ordinance. For transfer pricing purposes the following natural and legal persons are deemed closely related in particular: a) persons who have a direct or indirect interest in the taxpayer; b) persons who currently, or will in future, directly or indirectly benefit from the taxpayer; c) persons in whom the taxpayer has a direct or indirect interest, or from whom the taxpayer directly or indirectly benefits; d) executive bodies of the taxpayer; e) persons with whom the taxpayer is in a close personal relationship, in particular through family connection or as a friend; and f) persons in a close relationship with closely related persons as referred to in a) to d) in the way referred to in e). The definition also extends to persons in whom the closely related persons referred to in a) to c) have a direct or indirect interest or from whom they directly or indirectly benefit. There is also a quantitative documentation threshold: the documentation requirement for transactions with related parties applies when the direct or indirect shareholding or beneficial interest amounts to at least 25% (Article 31b paragraph 7 of the Tax Ordinance).

Methods and choice criteria

Liechtenstein relies on the transfer pricing methods recommended in the OECD TPG, with Article 31b paragraph 1 of the Tax Ordinance providing the legal basis. The ordinance explicitly recognises the standard methods: the Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Transactional Net Margin Method (TNMM) and Profit Split Method (PSM). Furthermore, Article 31 paragraph 1(f) of the Tax Ordinance allows the tax administration to accept any other suitable method if the enumerated methods are not appropriate to reflect the arm’s length principle. In practice no other methods are used. Regarding selection, there is no statutory hierarchy; Liechtenstein applies the most appropriate method approach as recommended by the OECD TPG (Article 31b paragraph 1 of the Tax Ordinance).

Comparability and ranges

Pursuant to Article 31b paragraph 1 of the Tax Ordinance, Liechtenstein follows the comparability analysis guidance set out in Chapter III of the OECD TPG. There is no preference for domestic comparables over foreign comparables and the tax administration does not use secret comparables. The legislation permits the use of an arm’s length range and statistical measures; in practice various interquartile measures are applied. Comparability adjustments are allowed in practice when required to achieve reliable comparables.

Documentation and reporting

Liechtenstein requires taxpayers to prepare transfer pricing documentation. Article 31b paragraphs 2 to 5 of the Tax Ordinance form the basis for the filing requirement for Master File and Local File consistent with Annexes I and II to Chapter V of the OECD TPG. The Country-by-Country (CbC) reporting framework is implemented via the CbC Act and its Ordinance. The Tax Ordinance provides simplifications for small and smaller entities: the ordinance indicates that “smaller entities” are those with consolidated turnover of less than CHF 900 million but higher than CHF 51.8 million; such smaller groups must prepare a description of the business model, a list of all business relationships with related parties, the reasoning and the result of the transfer pricing method used (Article 31b paragraph 4). Entities in groups with consolidated turnover below CHF 51.8 million are required only to provide evidence, upon request, of compliance with the arm’s length principle.

Regarding timing and formalities, Article 31b paragraph 6 of the Tax Ordinance requires that the documentation referred to in paragraphs 2 to 5 be filed upon request with the Fiscal Authority within 60 days and may be submitted in German or English. The CbC report must be filed with the Fiscal Authority within 12 months after the end of the reporting fiscal year, in German or English (Article 6 of the CbC Act). The profile does not provide detailed domestic guidance on specific CbC thresholds beyond the legal reference to the CbC Act.

Penalties and compliance incentives

The Tax Act and the CbC Act contain applicable sanctioning provisions. The Tax Act provides for general penalties under Article 135 et seq. If a person willfully or negligently fails to comply with the documentation obligation, financial penalties of up to CHF 10,000 may be imposed. The CbC Act contains penalty provisions (Articles 20 et seq.) establishing fines for violations of the filing obligation, including failure to file, late filing and inaccurate filing of the CbC report, of up to CHF 250,000.

Safe harbours and simplifications

For intragroup financial transactions, the Fiscal Authority issues a circular containing safe harbour rules (available in German via Onlineschalter under “Zinssätze für die Berechnung der geldwerten Leistungen”) that defines currency-specific interest rates for loans to or from related parties. These rates are considered a safe haven, while taxpayers retain the right to demonstrate deviating interest rates based on a detailed transfer pricing study. Article 54 of the Tax Act also limits deduction of interest on equity so that it may not give rise to or increase a loss for the period.

APAs, rulings and MAP

Liechtenstein provides administrative mechanisms to prevent and resolve transfer pricing disputes. Rulings and Advance Pricing Agreements (APAs) are available, including unilateral, bilateral and multilateral APAs; Mutual Agreement Procedures (MAP) are likewise available. The legal basis for rulings and APAs is Article 93a of the Tax Act in conjunction with Article 38a of the Tax Ordinance. No general time period for an APA is specified in the profile. An APA application may request a rollback to prior tax years provided the facts supporting the APA are identical to those prior years and the statute of limitations has not expired. The legal provisions for MAP are contained in Article 124 of the Tax Act, in the respective Double Taxation Agreements and in associated fact sheets on MAP.

Secondary adjustments, year‑end adjustments and other administrative matters

Year-end adjustments are permitted: financial statements may be changed to make year-end adjustments until they are formally approved by the competent corporate organ. Secondary adjustments are made in practice; Liechtenstein generally applies the deemed dividend and deemed equity contributions approach for secondary adjustments.

Attribution of profits to permanent establishments

Liechtenstein follows the Authorised OECD Approaches (AOA) for attributing profits to permanent establishments. The AOA is applied in Liechtenstein’s tax treaties with ten jurisdictions: Andorra, Germany, Guernsey, Iceland, Jersey, Monaco, the Netherlands, Switzerland, Hungary and the UAE. Except for the treaty with Austria, Liechtenstein has no pre-2008 treaties; the authorities consider that the 2008 updates to the Commentary to Article 7 (which incorporated parts of the AOA) apply in practice to older treaties as well, and therefore the AOA is applied functionally to Austria where appropriate.

Cost contribution arrangements and intra‑group services

There is no domestic legislation specifically on Cost Contribution Agreements; Liechtenstein follows the OECD TPG guidance on CCAs. For intra-group services the domestic law contains no detailed rules but Article 31b paragraph 1 of the Tax Ordinance refers to the OECD TPG; the administration applies the OECD simplified approach for low value-adding intra-group services.

Conclusion

Liechtenstein’s transfer pricing framework embeds the arm’s length principle into domestic law and explicitly adopts the OECD Transfer Pricing Guidelines as the interpretive standard for transactions with related parties and permanent establishments. The statutory regime recognises the classic OECD methods, applies the most appropriate method principle, requires preparation of Master File, Local File and CbC reports subject to size-based simplifications, provides safe harbour interest rates for intragroup financing while allowing taxpayers to demonstrate alternatives, and offers APAs, rulings and MAP as dispute avoidance and resolution tools. Document submission rules (languages and deadlines) and sanctioning provisions are clearly set out, and secondary adjustments and year-end adjustments are practised in line with the arm’s length standard.

References

For more information and access to the OECD transfer pricing country profiles, see: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html