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Hiring in Liechtenstein

Hiring employees compliantly in Liechtenstein means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Liechtenstein so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Liechtenstein; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Need assistance hiring in Liechtenstein? Contact us about our International EOR  Service

Labor Laws in Liechtenstein

Employment laws in Liechtenstein are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Liechtenstein employment laws and Liechtenstein policies here.

Employee Probation Period

  • Probationary period is typically between 1 and 3 months.

Annual Leave in Liechtenstein

  • Swiss law provides all employees with annual holiday paid leave. 
  • The minimum amount required by law is four weeks per year.
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Holidays in Liechtenstein

Liechtenstein celebrates fifteen national public holidays as well as additional public holidays that vary by state:

New Year’s Day 1st January
Epiphany 6th January
Candlemas  
Saint Joseph's Day 19th March
Easter Monday 13th April
1st May Labor Day
Ascension Day 21st May
Whit Monday 1st June
Corpus Christi 11th June
Liechtenstein National Day 15th August
Nativity of Mary 8th September
All Saints' Day 1st November
Feast of the Immaculate Conception 8th December
Christmas Day 25th December
St. Stephen's Day 26th December

 

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Maternity Leave Liechtenstein

  • The maternity leave encompasses the claim to a paid 20-week maternity leave.
  • All benefits provided by the funds in the event of illness are also granted during maternity. Accordingly, obligatory sickness benefits are granted to all employees with income-related benefits. 
  • This amounts to at least 80 % of the lost wage, including regular fringe benefits. Women who were members of a health insurance fund for a period of at least 270 days before giving birth may claim sickness benefit for 20 weeks. 
  • At least 16 of these weeks must be claimed after the birth.

Paternity Leave Liechtenstein

  • There is currently no statutory paternity leave

Sick Leave in Liechtenstein

  • Sick pay is generally paid from the second day of illness until the employee is able to work again.
  • However, sick pay (daily allowance) is paid out for a maximum 720 days within a period of 900 consecutive days. 
  • In the case of a complete inability to work, sick pay amounts to at least 80 % of the pay lost.

Working Hours in Liechtenstein

  • The normal working hours are as follows: -
    • 45 hours for employees in industrial enterprises, for office personnel, for technical and other employees including sales personnel in major retail businesses (retail sector)
    • 40 hours for young persons aged between 15 and 18
    • 48 hours for all other employees

Overtime in Liechtenstein

  • Overtime is defined as the hours exceeding the agreed upon amount of working hours agreed to in the employment contract. 
  • Overtime is typically paid at 125% of the normal rate or time off in lieu.

Termination of Employment in Liechtenstein

  • Generally, either party to an employment contract can give notice at any time with or without reason, provided that the statutory or contractually agreed period of notice is observed.
  • However, during certain periods the employee is protected from dismissal (so called “restricted periods”). 
  • In addition, the employer must ensure that dismissal cannot be regarded as abusive.
  • There is generally no need to give reasons for the termination of an employment contract.
  • However, the employee has the right to demand written reasons for termination and the employer is obliged to state these at the employee’s request.
  • At the end of the probationary period, the statutory notice periods are one month in the first year of service, two months in the second and up to and including the ninth year of service and three months thereafter. 
  • The parties may freely determine the duration of the period of notice in writing, whereby the period of notice may not be shorter than one month (special provisions for employees with a collective bargaining agreement apply).
  • In the event of termination of the employment relationship within a calendar year (e.g. to May 31), the employee has a pro-rata entitlement to holidays and other benefits, such as bonus payments or share-based compensation, provided that these payments qualify as a part of the salary. 
  • There is no severance pay required by law.
  • However, the employment contract may provide for a severance payment, for compensation with respect to a noncompetition clause or other indemnification.

Notice Period in Liechtenstein

  • At the end of the probationary period, the statutory notice periods are one month in the first year of service, two months in the second and up to and including the ninth year of service and three months thereafter. 
  • The parties may freely determine the duration of the period of notice in writing, whereby the period of notice may not be shorter than one month (special provisions for employees with a collective bargaining agreement apply).

Severance in Liechtenstein

  • In the event of termination of the employment relationship within a calendar year (e.g. to May 31), the employee has a pro-rata entitlement to holidays and other benefits, such as bonus payments or share-based compensation, provided that these payments qualify as a part of the salary. 
  • There is no severance pay required by law.
  • However, the employment contract may provide for a severance payment, for compensation with respect to a noncompetition clause or other indemnification.

Liechtenstein Salary and Wages

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13th/14th Month Salary in Liechtenstein

  • No
  • There is no statutory requirement to pay the 13th or the 14th month salary.
  • Employees may agree on bonuses with their employers.
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Income Tax in Liechtenstein

  • All resident or domiciled individuals are subject to income tax on worldwide income, with the exception of income from real estate located abroad and income from either a fixed place of business or a permanent establishment located abroad.
  • In addition, all resident or domiciled individuals are subject to income tax based on the standardized return level of worldwide net assets other than real estate and business premises located abroad. 
  • Nonresidents are subject to tax if they are employed in Liechtenstein, if they own real property in Liechtenstein or if they have business premises in Liechtenstein.
  • Nonresidents are subject to tax on income derived from Liechtenstein sources including Liechtenstein real estate, owned or leased, and business premises.
  • In addition, nonresidents are taxed on income from self-employment and business activities carried out in Liechtenstein.
  • Rates for national income tax are progressive up to 8%.
  • Municipal multipliers may range from 1.5 to 2.5, although in practice they range from 1.5 to 1.8 (i.e., the maximum rate is 22.4%).

Income Tax

Taxable Income (CHF) Rate (National Income Tax excluding Municipal Multipliers)
Up to 15,000 0%
15,001–20,000 1%
20,001–40,000 3%
40,001–70,000 4%
70,001–100,000 5%
100,001–130,000 6%
130,001–160,000 6.5%
160,001–200,000 7%
Over 200,000 8%
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Social Security in Liechtenstein

  • Employers deduct 4.7% from their employees' wages for social security, pay 4.9% themselves and give the whole 9.6% to the administration.
  • In addition, employers have to pay 1.9% of the relevant salary to the FAK and 0.391% of the relevant salary as administrative costs on the entire AHV-IV-FAK.

Contribution

Employer

Employee

AHV

4.15% 3.95%

IV

0.75% 0.75%

FAK

1.9% 0%

VK

0.3910% 0%

Immigration Liechtenstein

  • The government has limited immigration to Liechtenstein, making it difficult for foreign nationals to immigrate to the country. 
  • Limited exceptions are made for citizens of Switzerland and of EU and European Economic Area member countries.
  • EU and EEA citizens who want to work in Liechtenstein or who are employed by a Liechtenstein company must live in a neighboring country and commute across the border each day. 
  • However, if a person wants to commute for work purpose, they will still need a cross – border commuter permit. 
  • Swiss citizens are allowed to work in Liechtenstein without having to register for any type of permit, but they must remain resident in Switzerland.
  •  Non – EU citizens can obtain work or residence permits in Liechtenstein only if they are hired as managers, specialists or qualified workers.
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Work permits

  1. Swiss nationals
    • Appointment requires neither foreign police authorization nor an obligation to register.
  2. EEA nationals
    • Appointment is subject to an obligation to register, the employee is issued with a cross-border confirmation of registration
  3. Non-member state nationals:
    • Cross-border permit is required. This is valid for one year and is issued by the Migration and Passport Office subject to certain conditions.

Residence permits

  1. Swiss nationals and EEA nationals:
    • Every year 28 residence permits (B) are granted to EEA and Swiss nationals who are gainfully employed in Liechtenstein.
    • Half of these residence permits (B) are allocated by lottery, for which only EEA nationals are eligible.
  2. Non-member state nationals:
    • B permits can be Obtained if the applicant is a manager, specialist or another kind of qualified employee with completed professional workout or many years of professional experience.
Type of Visa/ Permit Documentation Validity Eligibility

B Permit

  • Completed application form
  • Two passport photos
  • Your original passport and copies of previous visas
  • Two blank passport pages
  • Proof of Academic Qualifications
  • Proof of previous work experience

5 years (renewable)

  • B permits can be Obtained if the non-member state applicant is a manager, specialist or another kind of qualified employee with completed professional workout or many years of professional experience.
  • Every year 28 residence permits (B) are granted to EEA and Swiss nationals who are gainfully employed in Liechtenstein.
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Value Added Tax (VAT) in Liechtenstein

  • Liechtenstein has adopted the VAT law of Switzerland, while having its own VAT administration.
  • The general VAT rate is 7.7%. 
  • A reduced rate of 2.5% is applicable to deliveries of food, drugs, newspapers, magazines, and books. 
  • Furthermore, lodging/accommodation is taxed at a reduced rate of 3.7%. 
  • Note that various services are VAT-exempt (e.g. health, social security, education, banking, insurance).

VAT

Standard Rate

Group 1083

7.7%

Reduced Rate Group 1083 2.5%
Reduced Rate Group 1083 3.7%
Exempt Group 1083 0%
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Mandatory Benefits in Liechtenstein

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, and overtime pay.
  • Statutory benefits also include social security benefits
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Mandatory Benefits overview

  • Probationary period

  • Annual Leave

  • Public Holidays

  • Maternity Leave

  • Sick Leave

  • Overtime Pay

  • Social Security Benefits

Payments And Invoicing

  • The tax returns are filed on a calendar-year basis.
  • Returns must be filed annually, normally, by 15 April of the year following the respective tax year. 
  • Married individuals are taxed jointly on all income (individual
  • tax assessment may be requested).
  • An exemption might be granted upon a written request to the communal tax authorities. 
  • For an extension period of more than one month, a prepayment of 80% of the previous year's taxes is required. 
  • The maximum extension period is five months.
  • Employees must enclose a certificate of remuneration issued by their employers.
  • The tax liability is definitive when the tax assessment has been delivered. 
  • Taxable persons can either pay the taxes within 30 days or make an objection against the tax assessment.
  • Employers need to deduct a withholding tax (WHT) from the salary of their employees. 
  • The income tax of self-employed persons (as well as of legal entities) needs to be paid provisionally, based on the taxable income of the last tax return. 
  • Provisionally paid taxes are credited to the definite tax due.

Payroll Accrual in Liechtenstein

Country Accruals Additional Information

Social security 4.70%
Unemployment 0.50%
Maternity 8weeks
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Description

The taxpayer’s share of social security contributions (old-age and dependent pension schemes, disability insurance) is 4.70% (with an upper limit of 18% for self-employed and employed individuals) and 0.5% for unemployment insurance on the first CHF 126,000 of compensation.

Payroll Accruals Additional Information

    Employment Accruals
Annual Leave The minimum amount required by law is four weeks per year. This equals 7.69% (4/52 weeks) of annual income
Maternity Leave The maternity leave encompasses the claim to a paid 20-week maternity leave. This equals 38.4% (20/52 weeks) of annual income
Sick Leave Sick pay is generally paid from the second day of illness until the employee is able to work again.
However, sick pay (daily allowance) is paid out for a maximum 720 days within a period of 900 consecutive days. In the case of a complete inability to work, sick pay amounts to at least 80 % of the pay lost.
This equals 80% of 80% (720/900 days) of annual income
Overtime Overtime is typically paid at 125% of the normal rate or time off in lieu. Depends on the number of overtime hours worked
Social Security Employers must make the following contributions:-
  • Old-age and survivors’ insurance 7.09%; Unemployment Insurance Fund 1%; Pension Fund 4%.
This equals 12.09% of annual income

Accrued Benefits in Liechtenstein

Christmas Bonus % 0%
Christmas Bonus Over Vacations % 0%
Severance per Year%

No evidence that it is a statutory requirement

0%
Vacations %

Employees are normally entitled to 20 days of annual holiday leave each year (5.49% of annual salary)

5.49%
Notice %

Employees are entitled to 1 week of notice period for one year of service or more (1.37%)

1.37
Christmas Bonus Over Notifications % 0%
Vacations Plus % 0%

Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per anum are equal to 6.89%

6.89%

Why use Global Expansion to hire in Liechtenstein

Establishing a branch office or subsidiary in Liechtenstein can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Liechtenstein labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Liechtenstein law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Liechtenstein. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Liechtenstein Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.

 

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