Liechtenstein, a small yet influential financial centre, has progressively aligned its tax laws with international standards to promote transparency and combat tax avoidance. As a member of the European Economic Area (EEA) and in close cooperation with the European Union (EU), Liechtenstein has implemented Country-by-Country Reporting (CbCR) requirements in line with the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13. This guide is designed to assist Chief Financial Officers (CFOs) and financial executives in Liechtenstein in understanding the CbCR obligations, ensuring compliance, and avoiding penalties.

Applicability of CbCR in Liechtenstein

Criteria for Reporting:

• CbCR applies to multinational enterprise (MNE) groups with consolidated annual revenues of €750 million or more in the preceding fiscal year.
• The ultimate parent entity of an MNE group is required to file the CbC report if it is tax resident in Liechtenstein.
• If the ultimate parent entity is based in a jurisdiction that does not require CbCR or does not exchange CbC reports, a surrogate parent entity in Liechtenstein may be required to file the report.

Relevant Legislation:

• Liechtenstein implemented CbCR regulations as part of its commitment to the OECD BEPS framework. These regulations are integrated into Liechtenstein’s domestic law through the Tax Act and related guidelines.
• The legal framework ensures that Liechtenstein’s CbCR rules are consistent with international standards, particularly those of the OECD and the EU.

Reporting Requirements

Information to be Reported:

• The CbC report must include detailed financial data for each tax jurisdiction in which the MNE operates, such as:
  • Total revenues (distinguished between related-party and unrelated-party revenues)
  • Profit (or loss) before tax
  • Income tax paid and accrued
  • Stated capital
  • Accumulated earnings
  • Number of employees
  • Tangible assets other than cash or cash equivalents
• The report must also identify all constituent entities in the MNE group, specifying their tax jurisdictions and principal business activities.

Form and Submission:

• The CbC report must be submitted electronically in XML format, consistent with the OECD’s standard template.
• Submission is made through the Tax Authority’s electronic filing system.
  • Detailed guidelines and technical instructions for submission are available on the Liechtenstein Tax Authority website.

Filing Deadlines

• The CbC report must be filed within 12 months following the end of the MNE group’s fiscal year. For example, if the fiscal year ends on 31 December 2023, the CbC report is due by 31 December 2024.
• MNEs in Liechtenstein that are not the ultimate parent entity but are part of a group subject to CbCR must notify the Liechtenstein Tax Authority of the entity responsible for filing the report and the jurisdiction where it will be filed. This notification must be made by the last day of the fiscal year.

Penalties for Non-Compliance

Penalties:

• Liechtenstein imposes significant penalties for non-compliance with CbCR obligations:
  • Failure to submit the CbC report, or submitting it late, can result in fines up to CHF 250,000.
  • Additional penalties may apply for providing incorrect or incomplete information, and repeated non-compliance can lead to increased scrutiny from tax authorities.

Defences:

• MNEs may argue reasonable cause or technical difficulties to mitigate penalties for non-compliance. However, such defences are reviewed on a case-by-case basis by the Liechtenstein Tax Authority.

Confidentiality and Use of Information

Data Protection:

• Liechtenstein adheres to strict data protection standards, consistent with the OECD’s guidelines on confidentiality and the secure handling of information.
• CbCR data is shared with other tax jurisdictions under competent authority agreements (CAAs), ensuring that information is only exchanged with jurisdictions that meet OECD confidentiality standards.
• The primary use of the data is for risk assessment and identifying BEPS-related risks, and the information is not publicly disclosed.