Feeling overwhelmed by complex tax codes and endless paperwork? If you’re an entrepreneur or digital nomad searching for a straightforward, low-bureaucracy way to operate your business in Europe, Liechtenstein’s sole proprietorship status—known locally as the Einzelfirma—offers a refreshingly simple solution. In this article, we’ll break down the essentials of setting up and running an Einzelfirma in Liechtenstein in 2025, using only the latest official data and practical, actionable steps.
What Is the Einzelfirma (Sole Proprietorship) in Liechtenstein?
The Einzelfirma is Liechtenstein’s answer to the classic sole proprietorship. It’s a business structure designed for individuals who want to invoice clients, manage their own affairs, and avoid the administrative overhead of a separate legal entity. This status is especially popular among freelancers, consultants, and small business owners who value autonomy and efficiency.
Key Features at a Glance
| Feature | Details (2025) |
|---|---|
| Availability | Open to all individuals (citizens and residents) |
| Legal Entity | No separate legal entity; owner is personally liable |
| Registration | Mandatory in Commercial Register if turnover > CHF 100,000 (approx. $113,000) |
| Taxation | Individual income tax rates: 3%–24% (state + municipal) |
| Social Security | Contributions required |
Why Entrepreneurs Choose the Einzelfirma in 2025
Many international founders are drawn to Liechtenstein’s Einzelfirma for its simplicity and flexibility. Unlike more complex corporate structures, the Einzelfirma lets you:
- Start operating quickly, with minimal red tape
- Retain full control over your business decisions
- Optimize your tax burden with progressive rates starting as low as 3%
However, it’s important to note that personal liability applies—meaning your private assets are at risk if the business incurs debts. For many, this is a fair trade-off for the freedom and low compliance costs.
Mini Case Study: Freelancer in Vaduz
Consider a freelance software developer based in Vaduz. With annual revenues of CHF 90,000 (approx. $101,700), registration in the Commercial Register isn’t required. The developer pays income tax on profits at progressive rates, starting at just 3%. Social security contributions are mandatory, but the overall administrative burden remains low—freeing up time and resources for actual business growth.
How to Register and Optimize Your Einzelfirma: Pro Tips
- Check Your Turnover
Pro Tip: If your annual turnover exceeds CHF 100,000 (approx. $113,000), registration in the Commercial Register is mandatory. Stay below this threshold to keep things simple, but register promptly if you cross it to avoid penalties. - Understand Your Tax Bracket
Pro Tip: Liechtenstein’s progressive income tax rates (3%–24% in 2025) can be optimized by careful income planning. Consider timing your invoicing or deductible expenses to stay in a lower bracket. - Budget for Social Security
Pro Tip: Social security contributions are non-negotiable. Factor these into your pricing and cash flow projections from day one. - Keep Meticulous Records
Pro Tip: Even if you’re not required to register, maintain clear records of all income and expenses. This not only simplifies tax filing but also protects you in case of audits.
Summary: Is Liechtenstein’s Einzelfirma Right for You?
For digital nomads and entrepreneurs seeking a lean, transparent business structure in 2025, the Einzelfirma offers a compelling mix of simplicity, flexibility, and tax efficiency. While personal liability is a consideration, the low entry barriers and straightforward compliance make it a favorite among those who value autonomy and minimal state interference.
For more details, consult the following official resources: