Liechtenstein and Germany signed a bilateral double taxation agreement on 2011. The treaty will become effective from 1 January 2013.
As per the agreement, there will be relief from withholding taxes for cross-border holdings as both countries agreed on 0% rates for withholding tax on interest payments and royalties flowing between Germany and Liechtenstein. A withholding tax rate of 0% also applies to dividends where the company receiving the dividend has directly held at least 10% of the voting power in the company paying the dividend for one year. Where the conditions are not fulfilled the withholding tax rate is 5%, and a rate of 15% applies where the recipient company owns less than 10% of the voting power in the company paying the dividend.
The treaty provides for the exchange of information and for administrative help in collecting taxes. The treaty also provides for a mutual agreement procedure and contains a provision for arbitration, subject to certain conditions, if the competent authorities cannot reach agreement.
