Financial Reporting in Liechtenstein in a Nutshell

Josef Bergt
2023

The process of financial reporting is a critical aspect that carries significant legal implications for companies. In the Principality of Liechtenstein, the rendering of accounts, bookkeeping, and disclosure of annual financial statements are governed by a set of detailed regulations, as outlined in Article 1045 et seq. and Article 1122 et seq. of the Liechtenstein Persons and Companies Act (PGR). This article aims to provide an overview of these regulations, elucidating the intricacies of financial reporting in Liechtenstein.

Legal entities that are obliged to be registered in the Commercial Register and that engage in activities of a commercial nature are obliged to render proper accounts. Companies limited by shares, partnerships limited by shares, companies with limited liability, and European companies (SE) are obliged to render proper accounts even if they do not engage in activities of a commercial nature.

Legal entities, general partnerships, and limited partnerships, that are not obliged to render proper accounts must, taking into account the principles of proper accounting, keep records appropriate to their financial circumstances and retain documents from which the course of business and the development of the assets can be traced.

Legal entities that are obliged to render proper accounts must prepare an opening balance sheet at the time of registration in the Commercial Register and then annual financial statements as at the end of each financial year. The annual financial statements consist of a balance sheet, an income statement, and notes (if necessary).

The annual financial statements and the annual report (if provided by law) must be prepared in German or English language and in CHF, EUR, or USD. Legal entities that are obliged to render accounts and that do not engage in activities of a commercial nature may also prepare the annual financial statements and the annual report exclusively in French, Italian, Spanish, or Portuguese and in any freely convertible foreign currency.

The annual financial statements must provide a true and fair view of the assets, financial, and earnings circumstances of the company. The statements must be made in the form, structure, and order required by law. The annual financial statements must contain the company name, legal form, registered domicile, and Commercial Register number of the company and must be signed by the representatives of the legal entity.

The audit, review, disclosure, and declaration obligations, as well as special simplified procedures relating to the size of companies, are also integral parts of the financial reporting process in Liechtenstein.

Legal entities that are obliged to render proper accounts must have their annual financial statements and, if necessary, their consolidated financial statements audited by an audit authority. The audit authority must be independent and must not be involved in the bookkeeping or the preparation of the annual financial statements. The audit authority must prepare a report on the results of its audit.

The annual financial statements and the annual report (if provided by law) must be disclosed by being deposited with the Office of Justice for public inspection. The annual financial statements and the annual report must be disclosed within six months of the end of the financial year. The Office of Justice may extend this period by a maximum of six months in justified cases.

Special simplified procedures are available for small and medium-sized companies. Micro companies are companies that do not exceed two of the three following criteria in two consecutive financial years: balance sheet total of CHF 450’000, net sales proceeds of CHF 900’000 and an average of 10 full-time employees. Small companies are those that do not exceed two of the three following criteria in two consecutive financial years: balance sheet total of CHF 7.4 million, net turnover of CHF 14.8 million, and an average of 50 full-time employees during the financial year. Medium-sized companies are those that do not exceed two of the three following criteria in two consecutive financial years: balance sheet total of CHF 25.9 million, net turnover of CHF 51.8 million, and an average of 250 full-time employees during the financial year with large companies being above these thresholds.

Sanctions are in place for non-compliance with these regulations. Failure to comply with disclosure obligations pursuant to Art. 1122 to 1130 PGR are fined by the Office of Justice of up to CHF 1’000. Failure to render proper accounts and carry out an audit or review may be punished by the Courts with penalties of up to CHF 10’000.

Source: Factsheet AJU/ h70.014e.04

Executive Summary:

• Legal entities that are obliged to be entered in the Commercial Register and that engage in activities of a commercial nature are obliged to render proper accounts.
• Legal entities, general partnerships, and limited partnerships, that are not obliged to render proper accounts must keep records appropriate to their financial circumstances and retain documents from which the course of business and the development of the assets can be traced.
• Legal entities that are obliged to render proper accounts must prepare an opening balance sheet at the time of registration in the Commercial Register and then annual financial statements as at the end of each financial year.
• The annual financial statements and the annual report (if provided by law) must be prepared in the German or English language and in CHF, EUR, or USD.
• The annual financial statements must provide a true and fair view of the assets, financial, and earnings circumstances of the company. The statements must be made in the form, structure, and order required by law.
• Legal entities that are obliged to render proper accounts must have their annual financial statements and, if necessary, their consolidated financial statements audited by an audit authority.
• The annual financial statements and the annual report (if provided by law) must be disclosed by being deposited with the Office of Justice for public inspection.
• Special simplified procedures are available for micro and small companies.
• Sanctions are in place for non-compliance with these regulations, including fines.