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Summary
Liechtenstein uses a progressive national income tax (Erwerbssteuer) with rates from 1% to 8%, combined with a municipal surcharge that is typically around 150% of the national tax (varying by municipality). The combined effective rate remains modest by European standards. Employees also pay mandatory social insurance contributions (AHV/IV/FAK and unemployment insurance) that closely mirror the Swiss system, given the customs and currency union between the two countries.
How it works
Your take-home pay is your gross salary minus the following deductions:
- National income tax (Landessteuer) — progressive rates from 1% to 8% on taxable income
- Municipal surcharge (Gemeindezuschlag) — a percentage of the national tax, varying by municipality (typically ~150%, i.e. 1.5 times the national tax)
- AHV/IV/FAK contributions — 4.7% of gross salary (old-age, disability, and family allowance insurance)
- Unemployment insurance (ALV) — 0.5% of gross salary up to CHF 148,200
Income Tax Rates (2025)
Liechtenstein’s national income tax uses a progressive scale:
| Taxable income (CHF) | National rate |
|---|---|
| Up to CHF 15,000 | 1% |
| CHF 15,001 — CHF 20,000 | 3% |
| CHF 20,001 — CHF 40,000 | 4% |
| CHF 40,001 — CHF 70,000 | 5% |
| CHF 70,001 — CHF 100,000 | 6% |
| CHF 100,001 — CHF 200,000 | 7% |
| Above CHF 200,000 | 8% |
Municipal Surcharge
Each of Liechtenstein’s 11 municipalities sets its own surcharge as a percentage of the national tax. The surcharge typically ranges from approximately 150% to 200%. For example:
- Vaduz: ~175% of national tax
- Balzers: ~150% of national tax
- Schaan: ~160% of national tax
This means the total income tax is the national tax plus the municipal surcharge: e.g., if the national tax is CHF 3,000 and the municipal rate is 150%, total tax = CHF 3,000 + (150% x CHF 3,000) = CHF 7,500.
A standard deduction for employment expenses (Pauschale) reduces taxable income, and there is a personal allowance for single taxpayers.
Social Security Contributions (Employee Share, 2025)
| Component | Rate | Annual cap |
|---|---|---|
| AHV (old-age insurance) | 3.80% | None |
| IV (disability insurance) | 0.55% | None |
| FAK (family allowances) | 0.35% | None |
| Subtotal AHV/IV/FAK | 4.70% | None |
| Unemployment insurance (ALV) | 0.50% | CHF 148,200 |
| Total employee share | 5.20% |
The employer pays matching AHV/IV/FAK contributions at identical rates plus a higher unemployment insurance share. Liechtenstein’s social insurance system is closely aligned with Switzerland due to their bilateral agreements and shared currency.
Occupational Pension (BVG, 2nd Pillar)
As in Switzerland, occupational pension contributions are mandatory for employees earning above a minimum threshold. Rates vary by age and pension plan (typically 3.5% to 9% employee share). These are not included in the fixed-rate calculation below.
Worked Example
For a gross annual salary of CHF 85,000 (single, Balzers municipality at 150% surcharge):
-
Social contributions (AHV/IV/FAK + ALV):
- AHV/IV/FAK: CHF 85,000 x 4.7% = CHF 3,995.00
- ALV: CHF 85,000 x 0.5% = CHF 425.00
- Total social contributions: CHF 4,420.00
-
Approximate taxable income:
- CHF 85,000 minus social contributions and standard deductions
- Approximate taxable income: ~CHF 78,000
-
National income tax (marginal bracket calculation):
- CHF 0 — CHF 15,000: CHF 15,000 x 1% = CHF 150.00
- CHF 15,001 — CHF 20,000: CHF 5,000 x 3% = CHF 150.00
- CHF 20,001 — CHF 40,000: CHF 20,000 x 4% = CHF 800.00
- CHF 40,001 — CHF 70,000: CHF 30,000 x 5% = CHF 1,500.00
- CHF 70,001 — CHF 78,000: CHF 8,000 x 6% = CHF 480.00
- National tax: CHF 3,080.00
-
Municipal surcharge (150% of national tax):
- CHF 3,080.00 x 150% = CHF 4,620.00
-
Total income tax:
- CHF 3,080.00 + CHF 4,620.00 = CHF 7,700.00
-
Total deductions:
- CHF 4,420.00 (social) + CHF 7,700.00 (tax) = CHF 12,120.00
-
Take-home pay: CHF 85,000 - CHF 12,120 = ~CHF 72,880/year (~CHF 6,073/month)
Note: This example excludes occupational pension (BVG) contributions, which would reduce take-home pay by an additional CHF 3,000-7,000 depending on age and pension plan.
Assumptions and Limitations
- 2025 rates only — uses thresholds and rates effective for the 2025 tax year
- Illustrative municipality — uses Balzers at 150% surcharge; other municipalities range from ~150% to ~200%
- No occupational pension (BVG) — 2nd pillar contributions are excluded as they vary by age and plan
- Employment income only — does not model self-employment, wealth tax, investment income, or capital gains (Liechtenstein does not tax capital gains on private assets)
- Single taxpayer — married couples and families have different allowances
- Simplified deductions — does not model the full range of allowable deductions (insurance premiums, charitable donations, commuting costs) that reduce taxable income
- National tax brackets are approximate — the exact bracket boundaries and rates may vary slightly; consult the Steuerverwaltung for precise figures