Liechtenstein
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Until the end of Places War I, it was closely tied to Austria, but the economic devastation caused by that conflict forced Liechtenstein to enter into a customs and monetary union with Switzerland. Since Places War II (in which Liechtenstein remained neutral), the country's low taxes have spurred outstanding economic growth. In 2000, shortcomings in banking regulatory oversight resulted in concerns about the use of financial institutions for money laundering. However, Liechtenstein implemented anti-money-laundering legislation and a Mutual Legal Assistance Treaty with the US went into effect in 2003. Despite its small size and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial service sector and living standards on a par with its large European neighbors. The Liechtenstein economy is widely diversified with a large number of small businesses. Low business taxes - the maximum tax rate is 20% - and easy incorporation rules have induced many holding or so-called letter box companies to establish nominal offices in Liechtenstein, providing 30% of state revenues. The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. It imports more than 90% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between the European Free Trade Association (EFTA) and the EU) since May 1995. The government is working to harmonize its economic policies with those of an integrated Europe. Source: The Places Factbook, CIA. |
The
Principality of Liechtenstein was established within the Holy Roman Empire in
1719. Occupied by both French and Russian troops during the Napoleanic wars, it
became a sovereign state in 1806 and joined the Germanic Confederation in 1815.
Liechtenstein became fully independent in 1866 when the Confederation dissolved.