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Global transfer pricing guide

Transfer pricing - Liechtenstein

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Introduction to transfer pricing in Liechtenstein
Transfer pricing rules
  • The Liechtenstein tax code includes a provision that all transactions between related parties have to comply with the arm’s length principle for tax purposes.
  • The tax ordinance includes further rules regarding the level of documentation required, accepted methods and further rules regarding master file and local file.
OECD guidance

In general, the OECD Transfer Pricing Guidelines apply in Liechtenstein. However, certain taxpayers (e.g. small companies) are not obliged to provide documentation which complies with the OECD Transfer Pricing Guidelines for certain transactions.

Other than the very general rules in the tax code and the tax ordinance, there are no official guidelines regarding transfer pricing (e.g. issued by the Liechtenstein tax authority).

Transfer pricing methods

The tax ordinance refers to the current OECD methods, i.e. the comparable uncontrolled price, resale price, cost plus, transactional net margin, and profit split methods. Other methods may be used if the aforementioned methods are not suitable for the specific transaction.

The ordinance does not include a hierarchy of methods and refers to the OECD Guidelines. Rather, the actual facts and circumstances of the relevant transaction have to be taken into account when choosing which method to apply.


Taxpayers have the obligation to make sure that all of their transactions with related parties adhere to the arm’s length principle for tax purposes and that the relevant documentation is prepared.

In Liechtenstein, all tax returns from individuals and legal persons are assessed by the tax authority annually. This, however, does not mean that the tax treatment of a certain transaction is approved by the tax authority if the assessment of one year does not include amendments for this transaction. The tax authority may also review this transaction in a following year and conclude that the selected method or documentation are not appropriate.

Transfer pricing documentation
Preparation of transfer pricing documentation

The level of required documentation depends on the size of the company and the related parties as well as on the size of the respective transaction.

Documentation requirements for big and medium-sized companies (see below for definitions) and participations in the related parties of at least 25%:

  • Members of a group of companies with a consolidated annual revenue exceeding CHF 900 m have to prepare a master file and local file. Documentation for the following cross-border transactions has to be prepared:
    • Purchase and/or sale of goods to related parties of more than CHF 1 m p.a. per related party
    • All other types of expenses and income if > CHF 250’000 p.a. per related party
  • Companies of which the total assets exceed CHF 25.9 m p.a., the net sales are more than CHF 51.8 m p.a. and who employ on average more than 250 persons have to prepare the following documentation for certain cross-border transactions (sale/purchase of goods > CHF 500’000 p.a. per related party; all other types of expenses and income if > CHF 125’000 p.a. per related party):
    • Description of the company, the business model and the legal and organizational structure
    • List of all business relationships with related parties (type and scope);
    • Description of the allocation of relevant functions, risks and assets between the different parties involved in related party transactions
    • Description of the selection of the transfer pricing method(s) for the relevant transaction(s) or type(s) of transaction(s) and reasons why the transfer pricing method(s) applied were selected
    • Documentation and/or analysis of the specific transfer pricing determination and the suitability of the transfer pricing method(s) used

For the aforementioned transactions, documentation has to be provided to the tax authority within 60 days upon request. The documentation may be in German or English.

Documentation requirements for small companies as well as big and medium-sized companies of which the participation in the related party does not exceed 25%:
For all other transactions between related parties (i.e. for participations lower than 25% or if the aforementioned criteria regarding the size of the company are not met), the taxpayer has to provide the tax authority upon request with “appropriate” documentation. Neither the tax code nor the tax ordinance contain any further regulations which methods or types of documentation are regarded as appropriate.

Country-by-country reporting:
Liechtenstein introduced country-by-country reporting in 2016 (entering into force on 2017/01/01) for groups with consolidated revenues over CHF 900m. The legal basis are the Convention on Mutual Administrative Assistance in Tax Matters (MAC) and the national CbC code.

Master and local file

Companies which are required to provide a master and local file have to adhere to the OECD Guidelines.

Some risk factors for challenge
  • Intra-group financing
  • Cash pools
  • Business restructurings
  • Documentation for small and medium sized companies (because there are no official guidelines and they are not obliged to comply with the OECD guidelines).
  • Transfer Pricing: Penalties for failing to comply with transfer pricing documentation requirements are derived from the general compliance regulations in the tax code. If a taxpayer fails to comply or fails to comply correctly with obligations under the tax code, the tax ordinance or ones that have been imposed by the tax authority (after having been reminded by the tax authority), will is liable to a fine of up to CHF 1’000 or in serious cases or in repeated cases up to CHF 10’000.
  • Country-by-Country (CbC) reporting: Penalties range from up to CHF 10’000 to CHF 500’000 depending on whether the taxpayer failed to comply with the requirements negligently, willfully, repeatedly or systematically.
Economic analysis and how to demonstrate an arm’s length result
  • Big and medium-sized companies (with participations > 25% in the related parties) have to comply with the OECD guidelines.
  • For small companies and transactions of big and medium-sized companies with related parties, where the participation is below 25%, the documentation to demonstrate that a price is at arm’s length has to be 'appropriate'. However, there are no official guidelines or any other form of clarification which methods or documentation might be deemed appropriate by the tax authority. Thus, this leaves a lot of room for discussion between the taxpayer and the tax authority.
  • The tax authority publishes safe harbour interest rates for loans between related parties on an annual basis. Taxpayers may use deviating interest rates, but will have to prove that these interest rates are at arm’s length for the specific transaction.
Advance Pricing Agreements (APAs), dispute avoidance and resolution
  • Advance Pricing Agreements (APAs): The Liechtenstein tax authority supports taxpayers who want to enter into APAs with other tax jurisdictions.
  • Mutual Agreement Procedures (MAP): All of Liechtenstein’s double tax treaties contain provisions on MAPs which are based on the OECD Model Tax Convention. Taxpayers must log a request for the initiation of a MAP within three years from the first notification about an event which triggers a taxation which is not in line with the double tax treaty. Costs for the procedure are in general born by Liechtenstein and the respective contracting state. The taxpayer has to bear the costs which he incurred, e.g. for his tax adviser.
  • Arbitration: Several of Liechtenstein’s double tax treaties (e.g. with Switzerland, Germany and the United Kingdom) contain arbitration clauses which ensure the settlement of a tax conflict by way of arbitration proceedings.

There are no exemptions from transfer pricing documentation rules.

For further information on transfer pricing in Liechtenstein please contact

Martina Benedetter.png

Martina Benedetter
T +423 (0) 237 42 35

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Rainer Marxer
T +423 (0) 237 42 07