Liechtenstein–Switzerland relations explained

Diplomatic and economic relations between Switzerland and Liechtenstein have been close, with Switzerland accepting the role of safeguarding the interests of its smaller neighbour, Liechtenstein.[1] Liechtenstein has an embassy in Bern.[2] Switzerland is accredited to Liechtenstein from its Federal Department of Foreign Affairs in Berne and maintains an honorary consulate in Vaduz.[3]

The two countries share an open border, mostly on the Rhine, but also in the Rätikon range of the Alps, between the Fläscherberg and the Naafkopf.

History of cooperation

After the dissolution of Austria-Hungary in 1918, the Liechtenstein government could no longer rely on Austria to fulfil their monetary and diplomatic needs, and Liechtenstein ceased the customs union that had existed between them since 1852. Under the initiative of Prince Karl Aloys of Liechtenstein, he appealed to Swiss Foreign Minister Felix Calonder to begin negotiations for a monetary and diplomatic union between the two countries.[4] At the request of Liechtenstein's government in October 1919, Switzerland agreed to safeguard Liechtenstein's interests and citizens abroad.[5] [6] Liechtenstein adopted use of the Swiss franc in 1920, and the two countries formed a customs union in 1924 with open borders.[7] [8] When Liechtenstein applied to join the League of Nations, Switzerland was the only country to vote in favour of their ascension at the League of Nations Assembly on 17 December 1920, as opposed to 28 against.[9]

During World War II, both countries were neutral. Liechtenstein sought to align itself as closely as possible with Switzerland during the war in hopes of retaining the country's neutrality.[10] It achieved the de facto inclusion of Liechtenstein in the Swiss national supply.[11] Though there were figures both inside and outside of Liechtenstein who used the country in order to recruit Liechtensteiners into the Waffen-SS and gain public sympathy for the Nazi cause, which infuriated Switzerland.[12] [13]

In 1949, Liechtenstein ceded the Ellhorn mountain to Switzerland as a result of Swiss demands and threats to, among other things, end the customs union between the two countries. Despite the local community in Balzers previously refusing to do so in November 1948, the transfer was approved by the Landtag of Liechtenstein the following month. In exchange to the transfer, Switzerland agreed to forgive much of Liechtenstein's debt that it had acquired to the country throughout World War II.[14] Both are now also parties to the Schengen Agreement. The countries also have a common patent system. Switzerland is empowered to enter into treaties on Liechtenstein's behalf if Liechtenstein is not represented at the treaty negotiations; this power has most often been exercised with treaties involving customs duties or procedures.

The customs union agreement was renegotiated in 1994 as a result of the 1992 Liechtenstein constitutional crisis, where Switzerland rejected a referendum on the European Economic Area, whereas Liechtenstein accepted it in a corresponding referendum.[15] [16] The treaty was revised to allow for greater freedom for Liechtenstein in defining its foreign policy and it joined the organisation in May 1995.[17] [18] Swiss consular protection is extended to citizens of Liechtenstein. Switzerland represents Liechtenstein abroad unless they choose otherwise. Before Liechtenstein became a member in its own right of the European Free Trade Association in 1999, Switzerland represented its interests in that organization.[19] [20]

The two also share a common language, German, and are both outside the European Union. Like Switzerland, Liechtenstein maintains a policy of neutrality. However, whilst Switzerland follows a policy of armed neutrality, Liechtenstein does not have an army of its own.[21] Ambassadors to one country are usually accredited to the other. The only resident ambassador in Liechtenstein is a knight of the Sovereign Military Order of Malta.

Incidents involving the Swiss military

The Swiss Armed Forces are relatively active due to ongoing conscription. Several incidents have occurred during routine training:

Taxation and tax treaties

Liechtenstein's standard rate of VAT (Mehrwertsteuer) is identical to Switzerland's for it must mirror the latter's continually and is currently 8.1%.[28] The reduced rate is 2.5%. A special reduced rate of 3.7% is in use in the hotel industry.[29]

In July 2015, both countries signed a new agreement on double taxation, which took effect in December 2016, superseding the previous one from 1995. Liechtenstein had hoped to implement withholding tax on Swiss residents working in Liechtenstein, but was unable to convince the Swiss to agree; Swiss border municipalities had opposed the change, fearing a loss of tax revenues.[30]

In November 2016, the parliament of the principality decided with a large majority to introduce an agreement of automatic exchange of financial account information with 27 new treaty partners, including Switzerland. Data collection started in 2018, and effectual exchange of account information began in 2019.[31]

See also

Notes and References

  1. http://www.eda.admin.ch/eda/en/home/topics/fl.html Principality of Liechtenstein
  2. https://www.regierung.li/ministries/ministry-for-foreign-affairs/diplomatic-representations/berne-ch/staff-contacts/ Embassy of Liechtenstein in Bern
  3. https://www.eda.admin.ch/countries/liechtenstein/en/home.html Representation of Switzerland to Liechtenstein
  4. Web site: Wanger . Harald . 31 December 2011 . Liechtenstein, Karl von (1878–1955) . 14 February 2024 . . de.
  5. Web site: Le Conseil fédéral confirme le souhait de la Principauté de représenter ses intérêts à l'étranger et propose la création d'une commission mixte pour élaborer les modalités des futures relations bilatérales. . 2 February 2023 . Dodis.ch . Dodis.
  6. Web site: Die liechtensteinische Gesandtschaft unterbreitet dem Politischen Departement die Grundlagen, auf welchen sich der Fürst die Vertretung des Fürstentums im Ausland wünscht. . Dodis.ch . Dodis . 2 February 2023.
  7. Web site: Marxer . Roland . 31 December 2011 . Zollanschlussvertrag . 25 October 2023 . . de.
  8. Web site: 2000-12-06 . Switzerland and Liechtenstein: December 2000 . 2012-09-16 . World Trade Organization.
  9. Web site: Biland . Susanna . 31 December 2011 . Völkerbund . 25 October 2023 . . de.
  10. News: Streitwireless . Clarence . 10 April 1938 . GUARANTEE SOUGHT BY LIECHTENSTEIN; Principality Wants to Join Switzerland if Powers Fail to Back Independencece GERMAN INVASION FEARED . The New York Times . 16 May 2023.
  11. Web site: Geiger . Peter . 31 December 2011 . Hoop,_Josef_(1895–1959) . 26 October 2022 . . de.
  12. News: 27 April 1939 . Liechtenstein Jails Nazi For Attempt at Uprising . The New York Times . 18 May 2023.
  13. Web site: Marxer . Wilfried . Volksdeutsche Bewegung in Liechtenstein (VDBL) . 14 November 2023 . . de.
  14. Web site: Büchel . Donat . 31 December 2011 . Ellhorn . 19 March 2024 . . de.
  15. Web site: Marxer . Wilfried . 31 December 2011 . Staatskrise (28.10.1992) . 18 February 2024 . . de.
  16. News: 14 December 1992 . Liechtenstein bucks Swiss in trade vote . 18 February 2024 . . 21 . Alberta.
  17. Web site: Sele . Patrick . Hochuli . Gerhard . Büchel . Donat . 31 December 2011 . Schweiz . 18 February 2024 . . de.
  18. http://eed.nsd.uib.no/webview/index.jsp?study=http%3A%2F%2F129.177.90.166%3A80%2Fobj%2FfStudy%2FLIREF1992_SUM_Display&mode=cube&v=2&cube=http%3A%2F%2F129.177.90.166%3A80%2Fobj%2FfCube%2FLIREF1992_SUM_Display_C1&top=yes Dataset: Liechtenstein: Referendum on the Agreement of European Economic Area 1992
  19. Web site: Frommelt . Fabian . 31 December 2011 . Frick, Alexander . 18 May 2023 . . de.
  20. News: 23 October 1961 . Liechtenstein Hilltop Is Summit For Conference of 'Little Four'; 'LITTLE 4' CONFER IN LIECHTENSTEIN . The New York Times . 18 May 2023.
  21. News: Liechtenstein: no retaliation for Swiss 'invasion'. Oliver. Mark. 2007-03-02. the Guardian. en. 2018-06-28.
  22. News: Pocket 'war'. The Canberra Times. October 16, 1968.
  23. News: Swiss Soldiers Inadvertently Invade Liechtenstein. Sarasota Herald-Tribune. September 1, 1976.
  24. Web site: Russell. Shahan. 2016-09-30. Neutral Switzerland Has Invaded Liechtenstein 3 times in 30 years - by Mistake. 2020-09-06. WAR HISTORY ONLINE. en.
  25. News: Swiss Inform Liechtenstein of Error in Troop Maneuvers. New York Times. 1992-10-18. 2009-11-27.
  26. News: Swiss in Liechtenstein 'invasion' . BBC News . 2007-03-03 . 2007-03-03.
  27. News: Whoops! Swiss Accidentally Invade Liechtenstein . ABC News . 2007-03-03 . 2007-03-03.
  28. Web site: Liechtenstein - Corporate - Other taxes . 2024-04-04 . . en-gb.
  29. Web site: Liechtenstein cuts VAT to 7.7% 2018 - Avalara.
  30. https://www.nzz.ch/schweiz/liechtenstein-scheitert-mit-quellensteuer-fuer-grenzgaenger-1.18476756 Liechtenstein scheitert mit Quellensteuer für Grenzgänger
  31. https://www.blick.ch/news/ausland/informationsaustausch-liechtenstein-und-schweiz-tauschen-kontoinformationen-aus-id7580999.html Liechtenstein und Schweiz tauschen Kontoinformationen aus

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