LIECHTENSTEIN BANKS. Economic Substance policy 2019

Following the revision of § 165 Criminal Act, from July 1, 2019, the usage of active (services, production, trade etc.) companies without physical substance will be seen as a measure to save tax and hence potentially classified as tax fraud. Therefore, such companies effecting bank transfers must be documenting:

- their physical substance at the place of effective management;
- existence of an adequate number of qualified employees;
- availability of adequate office space / storage facilities with appropriate infrastructure;
- existence of reasonable expenses according to the company’s activity.
(the above can be accomplished by providing employment agreements, lease agreements, utility bills and/or financial statements showing wages/insurance/rental expenses)
- their tax registration or tax conformity (if applicable, i.e. if requested by the jurisdiction in which the place of effective management is located);
- in case of unavailability: tax opinion etc.;
- the economic sense of their transactions. 

It must be taken into consideration that the provision of these documents does not guarantee the fulfilment of the requirements. 

Another innovation is that companies classified as active under CRS (ANFEs) without sufficient evidence of their status will be seen as an indication for money laundering.

In case of doubts as to the tax conformity of the business relationship, a temporary conversion to passive non-financial entity (PNFE) is permissible for the duration of obtaining the documents.

The classification as PNFEs for commercially active companies points to inadequate documentation or incorrect classification, which per se gives rise to particular caution.

Evidence of active ANFE are: 

- Financial statements 
- Trade certificate/trading license 
- Extract from company register/commercial register, or
- Invoices and trade contracts 

Please note that non-compliance with the above mentioned regulations can lead to non-execution of bank transfers after July 1, 2019, or even the closure of accounts beforehand.

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