The tiny nation of Liechtenstein was ravaged by two world wars and spent much of the first part of the twentieth century in dire financial straits. Because the European country’s economy was primarily based on agriculture, its ruling family was obliged to sell off its Old Master paintings to the highest bidder.
Now, Liechtenstein, which is celebrating the 300th anniversary of its founding today (Jan. 23), is thriving. The country is the world’s richest country per capita, thanks to a corporate tax rate of 12.5 percent, which is among the lowest on the continent, and lax incorporation regulations, which have led to many holding firms establishing offices in Vaduz, the country’s capital.
What accounts for Liechtenstein’s high GDP?
From Agricultural Roots to an Export-Oriented Manufacturing Sector and a Financial Center in Economic History
For centuries, Liechtenstein was a small, isolated country whose economy was based on its small agricultural sector and limited textile manufacture. Following WWII, however, Liechtenstein transformed itself from a largely agricultural state to a highly developed, export-oriented industrial nation with manufacturing as its primary industry.
Many Liechtenstein enterprises have risen to become leaders in their sectors over the last 75 years. This was accomplished with very little government assistance, as Liechtenstein has no economic sectors that receive government subsidies other than agriculture.
Liechtenstein has also experienced economic integration with Switzerland since 1923, thanks to a customs union. Furthermore, Liechtenstein’s economy has benefited enormously from its regional and global integration as a result of membership in multilateral organizations such as the European Free Trade Associations (EFTA), the European Economic Area (EEA), and the World Trade Organization (WTO).
Industry
Although Liechtenstein is best recognized for its financial hub, manufacturing is the largest contributor to the country’s GDP. Industry contributes 45.8% of the country’s gross domestic product (GDP).
Machine and tool engineering, plant building, precision instruments, and the dentistry and food sectors are the most important branches of Liechtenstein’s export-oriented industrial sector. Companies have shifted their attention away from mass-market and low-cost products and toward generating high-tech, high-quality products in all of these areas.
How did Liechtenstein become so wealthy?
“How would you feel if you found out you were the prime minister of a corrupt, immoral, and indecent country?” He says, his voice dropping off, “I’m not an aggressive man, but…”
According to excerpts from the investigation broadcast on Swiss television, one of the important figures is Hans Brunhart, who served as Prime Minister of Liechtenstein from 1978 to 1993 and is now the board president of Verwaltungs und Privatbank AG, one of the country’s largest banks.
Brunhart and the bank have both denied the allegations and stated that legal action against the German intelligence service is being considered.
Officials in Liechtenstein are particularly enraged by the German government’s refusal to provide a copy of the study or reveal any of its sources.
Frick acknowledges that some money laundering occurs herewhile emphasizing that it occurs in many countriesand believes that existing regulations may be tightened, perhaps by requiring financial officials to investigate the source of funds more closely and report suspect transactions.
Officials have conducted 75 investigations into suspected money laundering, but no convictions have resulted due to the difficulty in obtaining actual evidence, especially given Liechtenstein’s lack of an intelligence service, according to the prime minister.
However, according to Frick, the charges have shaken Liechtenstein’s financial sector out of its complacency, which is a viewpoint echoed by government opponents.
“Money laundering has always been a sensitive subject in this country,” says Paul Vogt, one of two left-wingers in the 25-seat Parliament. “No one has ever brought it up.”
Prince Hans-Adam II, whose family owns one of the country’s main banks, Liechtenstein Global Trust, likewise emphasizes the necessity to keep the principality free of organized crime.
However, he sees the German claims as a possible pressure technique to get Liechtenstein to align its tax policy with that of its neighbors.
There are an estimated 70,000 “letterbox” firms in Liechtensteinmore than twice the populationthat have registered offices in the name of a Liechtenstein representative but operate internationally. It’s a clever way to evade detection at home while taking advantage of Liechtenstein’s renowned cheap taxes, which can be as low as 1%.
German authorities have long been concerned that wealthy Germans are using the principality to avoid paying their fair share of taxes.
Hans-Adam, on the other hand, insists that his principality will not be pressured to raise taxes or amend its rules.
In an interview, he declares, “We have survived three Reichs.” “I believe we have a fair chance of surviving the Fourth Reich,” says the narrator.
Liechtenstein stayed out of World War II thanks to its tight ties with neighboring neutral Switzerland. It was so bad that Prince Franz Josef II, Hans-father, Adam’s had to sell some of the family jewels to help the government.
Thanks to creative industries and its reputation as a tax shelter, the country rose from rags to riches after WWII. The financial services sector exploded after it joined a European free trade agreement in 1995.
Despite the fact that Liechtenstein is still connected to Switzerland by a 75-year-old customs union, it is becoming increasingly independent, having acquired its own national telephone code last year after sharing Switzerland’s.
The government has lots of cash because to the flourishing economy; in 1999, it had a budget surplus of approximately $16 million. Along with large new office buildings and banks, a $19 million art museum and a new national museum costing $16 million are being built in the centre of Vaduz.
However, unlike Monaco, the principality is far from becoming a playground for the wealthy. There are no private jet landing strips or penthouse suites.
Is Liechtenstein a wealthy nation?
Liechtenstein has grown into a successful, highly industrialized, free-enterprise economy with a key financial services industry and one of the highest per capita income levels in the world, despite its tiny size and lack of natural resources. The economy of Liechtenstein is diverse, with a considerable number of small and medium-sized firms, especially in the services sector. Low business taxes (a flat rate of 12.5 percent on income) and simple formation regulations have prompted numerous holding corporations to create nominal offices in Liechtenstein, which provide 30 percent tax relief.
What is Liechtenstein’s most famous feature?
The Principality of Liechtenstein, a tiny autonomous state nestled between Switzerland and Austria, is one of Europe’s most beautiful Alpine countries. Despite its small area of 160 square kilometers and population of only 38,000 people, Liechtenstein is an economic powerhouse because to its favorable tax regulations.
It is also the world’s most industrialized country (despite its forested hillsides and Alpine meadows would have you believe otherwise). It has been inhabited since the Early Stone Age and was important during Roman times until becoming the Imperial Principality of Liechtenstein in 1719 and being fully autonomous in 1806.
Because of its beautiful mountain backdrop, the country is now a famous tourist destination. The numerous great hiking trails (check out the routes around Falknis and Naafkopf, two of the country’s highest peaks), as well as the numerous ski and winter activities, are also important draws.
It’s simple to see why Liechtenstein is one of the best places to visit in Europe when you consider its many spectacular points of interest and tourist attractions, such as museums, galleries, and castles.
With this list of the top tourist sites in Liechtenstein, you can discover the best sightseeing options in this little country.
Due to recent global health and safety challenges, certain businesses may be temporarily shuttered.
Is Monaco a wealthier country than Liechtenstein?
increase your earnings by 20.2 percent As of 2015, Monaco had a GDP per capita of $115,700, whereas Liechtenstein had a GDP per capita of $139,100.
What is Liechtenstein’s most important export?
Metal by-products accounted for 22% of total exports, followed by equipment, apparatus, and electronics (22%), precision instruments, watches, and jewelry (12%), vehicles (11%), pharmaceutical and chemical products (10%), and precious metals, jewels and gemstones (10%). (8 percent).
What distinguishes Liechtenstein?
Liechtenstein maintains a lesser profile than its Swiss and Austrian neighbors.
The tiny country is Europe’s second-least-visited, with a population of barely 38,000 people. It is roughly eight times smaller than Los Angeles, with an area of about 62 square miles. It lacks an airport and a shoreline, and its major city has a population of only 6,000 people.
Despite its small size, Liechtenstein possesses the world’s second-highest per capita GDP of $165,028 (surpassed only by Monaco). It also has almost no national debt.
Continue reading for 11 fascinating facts about Liechtenstein’s people and economy.
What is Liechtenstein’s per capita income?
It is regarded as a crucial indication of a country’s economic strength, with a positive change indicating economic growth. Liechtenstein’s GDP per capita was predicted to be around 175,813.9 US dollars in 2019.
Who is Liechtenstein’s owner?
Prince Hans-Adam, who had threatened to leave the country if he lost, won a significant majority (64.3 percent) in favor of revising the constitution, essentially giving him greater powers than any other European monarch, in a referendum on March 16, 2003. The new constitution provided the prince the power to abolish governments and appoint judges, as well as the ability to veto laws by refusing to sign them within six months.
Hans-Adam declared on August 15, 2003 that he will stand down in a year and give over the reins to his son Alois. Although Prince Hans-Adam remained the official head of state, he passed over the practical management of the principality to his son, Crown Prince Alois, in August 2004.
On July 1, 2007, Liechtenstein’s first two Consuls were appointed to represent the Principality in the United States of America.
In a constitutional referendum in June 2012, voters determined that Crown Prince Alois should be allowed to keep his veto power over choices made in national elections.
Liechtenstein invented what?
The CURTA was the world’s smallest mechanical calculator capable of performing large calculations. Curt Herzstark from Vienna patented it in 1938. The Second World War put a stop to development. Curt Herzstark was imprisoned at the Buchenwald concentration camp, where he spent his free time drawing blueprints for the calculating machine. After the war, Prince Franz Josef II got aware of the idea and established the Contina AG calculating machine company. Despite the constraints of the postwar era, such as a scarcity of skilled personnel and severe economic conditions in Liechtenstein, Curt Herzstark established production. For the first time, this exhibition brings together originals of all the different versions that have been developed over the years. It also uses unique exhibits, images, films, and documents to highlight the economic backdrop, industry progress, and the life of the inventor himself.
More information on the special exhibition The CURTA Made in Liechtenstein can be found here. Here’s how an inventor’s dazzling idea became a Liechtenstein-made industrial product.