Liechtenstein

Gutenberg Castle, Balzers, Liechtenstein

Vaduz Castle, overlooking the capital, is home to the Prince of Liechtenstein.

Johann I Joseph, Prince of Liechtenstein from 1805 to 1806 and 1814 to 1836, by Johann Baptist von Lampi the Elder. Liechtenstein Museum, Vienna

The oldest traces of human existence in the area of present-day Liechtenstein date back to the Middle Paleolithic era.[16] Neolithic farming settlements appeared in the valleys around 5300 BC.

The Hallstatt and La Tène cultures flourished during the late Iron Age, from around 450 BC—possibly under some influence of both the Greek and Etruscan civilisations. One of the most important tribal groups in the Alpine region were the Helvetii. In 58 BC, at the Battle of Bibracte, Julius Caesar defeated the Alpine tribes, thereby bringing the region under close control of the Roman Republic. By 15 BC, Tiberius—later the second Roman emperor—with his brother, Drusus, conquered the entire Alpine area. Liechtenstein then became integrated into the Roman province of Raetia. The area was garrisoned by the Roman army, which maintained large legionary camps at Brigantium (Austria), near Lake Constance, and at Magia (Swiss). The Romans built and maintained a road which ran through the territory. Around AD 260 Brigantium was destroyed by the Alemanni, a Germanic people who settled in the area in around AD 450.

In the Early Middle Ages, the Alemanni settled the eastern Swiss plateau by the 5th century and the valleys of the Alps by the end of the 8th century, with Liechtenstein located at the eastern edge of Alemannia. In the 6th century the entire region became part of the Frankish Empire following Clovis I's victory over the Alemanni at Tolbiac in AD 504.[17][18]

The area that later became Liechtenstein remained under Frankish hegemony (Merovingian and Carolingian dynasties) until the Treaty of Verdun divided the Carolingian empire in AD 843, following the death of Charlemagne in 814.[16] The territory of present-day Liechtenstein formed part of East Francia. It would later be reunified with Middle Francia under the Holy Roman Empire, around AD 1000.[16] Until about 1100, the predominant language of the area was Romansch, but thereafter German began to gain ground in the territory. In 1300 another Alemannic population—the Walsers, who originated in Valais—entered the region and settled; the mountain village of Triesenberg today preserves features of the Walser dialect.[19]

By 1200, dominions across the Alpine plateau were controlled by the Houses of Savoy, Zähringer, Habsburg, and Kyburg. Other regions were accorded the Imperial immediacy that granted the empire direct control over the mountain passes. When the Kyburg dynasty fell in 1264, the Habsburgs under King Rudolph I (Holy Roman Emperor in 1273) extended their territory to the eastern Alpine plateau that included the territory of Liechtenstein.[17] This region was enfeoffed to the Counts of Hohenems until the sale to the Liechtenstein dynasty in 1699.

In 1396 Vaduz (the southern region of Liechtenstein) gained imperial immediacy, i.e. it became subject to the Holy Roman Emperor alone.[20]

The family from which the principality takes its name originally came from Liechtenstein Castle in Lower Austria, which they had possessed from at least 1140 until the 13th century (and again from 1807 onwards). The Liechtensteins acquired land, predominantly in Moravia, Lower Austria, Silesia, and Styria. As these territories were all held in feudal tenure from more senior feudal lords, particularly various branches of the Habsburgs, the Liechtenstein dynasty was unable to meet a primary requirement to qualify for a seat in the Imperial diet (parliament), the Reichstag. Even though several Liechtenstein princes served several Habsburg rulers as close advisers, without any territory held directly from the Imperial throne, they held little power in the Holy Roman Empire.

For this reason, the family sought to acquire lands that would be classed as unmittelbar (not sellable) or held without any intermediate feudal tenure, directly from the Holy Roman Emperor. During the early 17th century Karl I of Liechtenstein was made a Fürst (prince) by the Holy Roman Emperor Matthias after siding with him in a political battle. Hans-Adam I was allowed to purchase the minuscule Herrschaft ('Lordship') of Schellenberg and the county of Vaduz (in 1699 and 1712 respectively) from the Hohenems. Tiny Schellenberg and Vaduz had exactly the political status required: no feudal lord other than their comital sovereign and the suzerain Emperor.

On 23 January 1719,[21] after the lands had been purchased, Charles VI, Holy Roman Emperor, decreed that Vaduz and Schellenberg were united and elevated the newly formed territory to the dignity of Fürstentum ('principality') with the name "Liechtenstein" in honour of "[his] true servant, Anton Florian of Liechtenstein". On this date, Liechtenstein became a sovereign member state of the Holy Roman Empire. It is a testimony to the mere political expediency of the purchase that the Princes of Liechtenstein did not visit their new principality for almost 100 years.

By the early 19th century, as a result of the Napoleonic Wars in Europe, the Holy Roman Empire came under the effective control of France, following the crushing defeat at Austerlitz by Napoleon in 1805. In 1806 Emperor Francis II abdicated and dissolved the Holy Roman Empire, ending more than 960 years of feudal government. Napoleon reorganized much of the Empire into the Confederation of the Rhine. This political restructuring had broad consequences for Liechtenstein: the historical imperial, legal, and political institutions had been dissolved. The state ceased to owe an obligation to any feudal lord beyond its borders.[21]

Modern publications generally attribute Liechtenstein's sovereignty to these events. Its prince ceased to owe an obligation to any suzerain. From 25 July 1806, when the Confederation of the Rhine was founded, the Prince of Liechtenstein was a member, in fact, a vassal, of its hegemon, styled protector, the French Emperor Napoleon I, until the dissolution of the confederation on 19 October 1813.

Soon afterward, Liechtenstein joined the German Confederation (20 June 1815 – 23 August 1866), which was presided over by the Emperor of Austria.

In 1818, Prince Johann I granted the territory a limited constitution. In that same year Prince Aloys became the first member of the House of Liechtenstein to set foot in the principality that bore their name. The next visit would not occur until 1842.

Developments during the 19th century included:

• 1836: the first factory for making ceramics was opened.
• 1861: the Savings and Loans Bank was founded along with the first cotton-weaving mill.
• 1866: the German Confederation was dissolved.
• 1868: the Liechtenstein Army was disbanded for financial reasons.
• 1872: a railway line between Switzerland and the Austro-Hungarian Empire was constructed through Liechtenstein.
• 1886: two bridges over the Rhine to Switzerland were built.

Until the end of World War I, Liechtenstein was closely tied first to the Austrian Empire and later to Austria-Hungary; the ruling princes continued to derive much of their wealth from estates in the Habsburg territories, and spent much of their time at their two palaces in Vienna. Johann II appointed Carl von In der Maur, an Austrian aristocrat, to serve as the Governor of Liechtenstein. The economic devastation caused by the First World War forced the country to conclude a customs and monetary union with its other neighbour, Switzerland.

Franz I, Prince of Liechtenstein from 1929 to 1938

In 1929, 75-year-old Prince Franz I succeeded to the throne. He had just married Elisabeth von Gutmann, a wealthy woman from Vienna whose father was a Jewish businessman from Moravia. Although Liechtenstein had no official Nazi party, a Nazi sympathy movement arose within its National Union party. Local Liechtenstein Nazis identified Elisabeth as their Jewish "problem".[22]

In March 1938, just after the annexation of Austria by Nazi Germany, Franz named as regent his 31-year-old grandnephew and heir-presumptive, Prince Franz Joseph. Franz died in July that year, and Franz Joseph succeeded to the throne. Franz Joseph II first moved to Liechtenstein in 1938, a few days after Austria's annexation.[20]

During World War II, Liechtenstein remained officially neutral, looking to neighbouring Switzerland for assistance and guidance, while family treasures from dynastic lands and possessions in Bohemia, Moravia, and Silesia were taken to Liechtenstein for safekeeping. At the close of the conflict, Czechoslovakia and Poland, acting to seize what they considered German possessions, expropriated all of the Liechtenstein dynasty's properties in those three regions. The expropriations (subject to modern legal dispute at the International Court of Justice) included over 1,600 km² (618 sq mi) of agricultural and forest land (most notably the UNESCO listed Lednice–Valtice Cultural Landscape), and several family castles and palaces.

In 2005 it was revealed that Jewish slave labourers from the Strasshof concentration camp, provided by the SS, had worked on estates in Austria owned by Liechtenstein's Princely House.[23]

Citizens of Liechtenstein were forbidden to enter Czechoslovakia during the Cold War. More recently the diplomatic conflict revolving around the controversial postwar Beneš decrees resulted in Liechtenstein not having international relations with the Czech Republic or Slovakia. Diplomatic relations were established between Liechtenstein and the Czech Republic on 13 July 2009,[24][25][26] and with Slovakia on 9 December 2009.[27]

Liechtenstein was in dire financial straits following the end of World War II. The Liechtenstein dynasty often resorted to selling family artistic treasures, including the portrait Ginevra de' Benci by Leonardo da Vinci, which was purchased by the National Gallery of Art of the United States in 1967 for US$5 million ($41 million in 2021 dollars), then a record price for a painting.

By the late 1970s, Liechtenstein used its low corporate tax rates to draw many companies and became one of the wealthiest countries in the world.

Liechtenstein is one of the few countries in Europe (along with Monaco and San Marino) not to have a tax treaty with the United States, and efforts toward one seem to have stalled.[28][29]

As of September 2019 the Prince of Liechtenstein is the world's sixth wealthiest monarch, with an estimated wealth of US$3.5 billion.[30] The country's population enjoys one of the world's highest standards of living.

In a national referendum in March 2003, nearly two-thirds of the electorate voted in support of Hans-Adam II's proposed new constitution. The proposed constitution was criticised by many, including the Council of Europe, as expanding the powers of the monarchy (continuing the power to veto any law, and allowing the Prince to dismiss the government or any minister). The Prince threatened that if the constitution failed, he would, among other things, convert some royal property for commercial use and move to Austria.[37] The princely family and the Prince enjoy tremendous public support inside the nation, and the resolution passed with about 64% in favour.[38] A proposal to revoke the Prince's veto powers was rejected by 76% of voters in a 2012 referendum.[39]

Municipalities of Liechtenstein are entitled to secede from the union by majority vote.[40]

The municipalities of Liechtenstein are divided between the two electoral districts of Unterland and Oberland. The country's political division is historical; the Unterland depends on Schellenberg, the Oberland on the county of Vaduz.

The northern communities of Eschen, Gamprin, Mauren, Ruggell and Schellenberg belong to Unterland; the municipalities of Balzers, Planken, Schaan, Triesen, Triesenberg and Vaduz belong to the much larger Oberland. The autonomy of the Liechtenstein communities is in the upper range compared to the other Central European states along with Switzerland. Despite their small size, the municipalities have complex forms in terms of their territorial extent: in addition to a main part, seven municipalities also include one or more exclaves. Citizens' cooperatives, which exist in about half of Liechtenstein's municipalities, own forests and pastures for collective use, as well as parceled areas that are left for private use.

In 2013, Liechtenstein won for the first time a SolarSuperState Prize in the Solar category recognizing the achieved level of the usage of photovoltaics per population within the state territory.[41] The SolarSuperState Association justified this prize with the cumulative installed photovoltaic power of some 290 Watt per capita at the end of 2012. This placed Liechtenstein second in the world after Germany. Also in 2014, the SolarSuperState Association awarded the second place SolarSuperState Prize in the Solar category to Liechtenstein.[42] In the years 2015 and 2016, Liechtenstein was honoured with the first place SolarSuperState Prize in the Solar category because it had the world's biggest cumulative installed photovoltaic power output per capita.[43][44]

Maltese consulate in Schaan

In the absence of political or military power, Liechtenstein has sought to preserve its sovereignty over the past 200 years through membership in legal communities. International cooperation and European integration are therefore constants of Liechtenstein's foreign policy, aimed at continuing to safeguard the country's sovereignty as recognized under international law. Decisive for the domestic legitimacy and sustainability of this foreign policy were and are strong direct-democratic and citizen-oriented decision-making mechanisms, which are anchored in Liechtenstein in the Constitution of 1921.

Important historical stages in Liechtenstein's integration and cooperation policy were its accession to the Confederation of the Rhine in 1806,[45] to the German Confederation in 1815,[46] the conclusion of bilateral customs and currency agreements with the Danube Monarchy in 1852, and finally the Customs Treaty with Switzerland in 1923, which was followed by a whole series of other important bilateral treaties.

Post-war economic reconstruction was followed by accession to the Statute of the International Court of Justice in 1950, Liechtenstein signed the CSCE Helsinki Final Act (today's OSCE) together with 34 other states in 1975, Liechtenstein joined the Council of Europe in 1978,[47] and Liechtenstein was admitted to the United Nations (UN) on September 18, 1990.[48] In 1991, Liechtenstein joined the European Free Trade Association (EFTA) as a full member, and since 1995 Liechtenstein has been a member of the European Economic Area (EEA) and the World Trade Organization (WTO).[49] In 2008, Liechtenstein joined the Schengen/Dublin Agreement together with Switzerland. From an economic and integration policy perspective, relations within the framework of the EEA and the EU occupy a special position in Liechtenstein's foreign policy. The Hereditary Prince of Liechtenstein also participates in the annual meetings of the heads of state of the German-speaking countries (consisting of EU and non-EU members).[50]

Relations with Switzerland are particularly extensive because of the close cooperation in many areas; Switzerland performs tasks in some places that would be difficult for the Principality to handle on its own because of its small size. Since 2000, Switzerland has appointed an ambassador to Liechtenstein, but he resides in Bern. Liechtenstein's consular representation has been mostly handled by Switzerland since the Customs Treaty with Switzerland of 1923.

Liechtenstein maintains direct diplomatic missions in Vienna, Bern, Berlin, Brussels, Strasbourg, and Washington, D.C., as well as Permanent Missions in New York and Geneva to the United Nations.[51] Currently, diplomatic missions from 78 countries are accredited to Liechtenstein, but mostly reside in Bern. The Embassy in Brussels coordinates contacts with the European Union, Belgium, and also the Holy See.

For a long time, diplomatic relations with Germany were maintained through a non-resident ambassador; that is, a contact person who was not permanently resident in Germany. Since 2002, however, Liechtenstein has had a permanent ambassador in Berlin, while the German embassy in Switzerland is also responsible for the Principality. Liechtenstein's Ministry of Foreign Affairs considers the contacts to be extremely fruitful and important for the country's development, especially on the economic level.

Conflicts over the handling of banking and tax data have repeatedly strained relations with Germany. On September 2, 2009, Liechtenstein and Germany signed an agreement on cooperation and the exchange of information in tax matters. The text of the agreement followed the OECD model agreement and provides for an exchange of information on tax matters upon request as of the 2010 tax year. In addition, Liechtenstein regards the Germany as an important partner in safeguarding its interests in European integration. At the cultural level, project sponsorship plays a particularly important role. For example, the Hilti Foundation financed the exhibition "Egypt's Sunken Treasures" in Berlin, and the state donated 20,000 euros following the fire at the Duchess Anna Amalia Library in Weimar.

Despite its alpine location, the prevailing southerly winds temper Liechtenstein's climate. Its climate is continental, with cloudy and cold winters, with frequent rain and snowfall. Summers are cool to slightly warm, cloudy, and humid.

The country's climate is relatively mild despite its mountainous location. It is strongly influenced by the action of foehn (warm and dry fall wind), so the vegetation period is prolonged in spring and autumn and temperatures around 15 °C due to the strong foehn are not uncommon even in winter. The mountain ranges of Switzerland and the Vorarlberg upstream protect from the cold polar and Atlantic air, creating a typical alpine inland protective layer. The principality has orchards with leafy meadows and a long tradition of viticulture. Liechtenstein's small land area hardly plays a role in climatic differences, but the vertical division into different altitudes is of great importance, so that significant climatic differences arise.

In winter the temperature rarely drops below minus 15 degrees Celsius, while in summer the average temperatures range between 20 and 28 degrees Celsius. Annual precipitation measurements amount to an average of about 900 to 1200 millimeters, in the direct alpine region, however, precipitation is often up to 1900 millimeters. The average duration of sunshine is about 1600 hours per year.

Panorama of Vaduz, capital of Liechtenstein

The Rhine is the longest and largest body of water in Liechtenstein. With a length of approximately 27 kilometers, it represents the natural border with Switzerland and is of great importance for Liechtenstein's water supply. Furthermore, the Rhine is an important recreational area for the population. At 10 kilometers, the Samina is the second longest river in the Principality. The troubled river begins at Triesenberg and flows into the Ill in Austria (near Feldkirch).

The only naturally formed lake in Liechtenstein is the Gampriner Seelein, which was not formed until 1927 by a flooding of the Rhine with enormous erosion. In addition, there are other artificially created lakes, which are mainly used to generate electricity. One of them is the Steg Reservoir, the largest lake in Liechtenstein.

About half of Liechtenstein's territory is mountainous.[57] Liechtenstein lies entirely in the Rhaetikon and is thus – depending on the classification of the Alps – assigned either to the Eastern Alps (two-part division of the Alps) or to the Central Alps (three-part division of the Alps).

The highest point of Liechtenstein is the Vordere Grauspitz (Vordergrauspitz) with an altitude of 2599 m above sea level, while the lowest point is the Ruggeller Riet with an altitude of 430 m above sea level.

In total, there are 32 mountains in Liechtenstein with an altitude of at least 2000 meters. The Falknishorn, at 2452 meters above sea level, is the fifth highest mountain in Liechtenstein and represents the southernmost point of the country. The Liechtenstein-Graubünden-Vorarlberg border triangle is the Naafkopf (2570 m above sea level).[57]

In addition to the peaks of the Alpine chain,[58] which belong to the Limestone Alps, two inselbergs, Fläscherberg (1135 meters above sea level.) in the south and Eschnerberg (698 m) in the north, rise from the Rhine Valley and belong to the Helvetic cover or flysch zone of the Alps.[59] Eschnerberg represents an important settlement area in the Liechtenstein Unterland.

Since 1923, there has been no border control between Liechtenstein and Switzerland.

The government of Liechtenstein taxes personal income, business income and principal (wealth). The basic rate of personal income tax is 1.2%. When combined with the additional income tax imposed by the communes, the combined income tax rate is 17.82%.[60] An additional income tax of 4.3% is levied on all employees under the country's social security programme. This rate is higher for the self-employed, up to a maximum of 11%, making the maximum income tax rate about 29% in total. The basic tax rate on wealth is 0.06% per annum, and the combined total rate is 0.89%. The tax rate on corporate profits is 12.5%.[54]

Liechtenstein's gift and estate taxes vary depending on the relationship the recipient has to the giver and the amount of the inheritance. The tax ranges between 0.5% and 0.75% for spouses and children and 18% to 27% for non-related recipients. The estate tax is progressive.

Liechtenstein has previously received significant revenues from Stiftungen ("foundations"), financial entities created to hide the true owner of nonresident foreigners' financial holdings. The foundation is registered in the name of a Liechtensteiner, often a lawyer. This set of laws used to make Liechtenstein a popular tax haven for extremely wealthy individuals and businesses attempting to avoid or evade taxes in their home countries.[61] In recent years, Liechtenstein has displayed stronger determination to prosecute international money launderers and worked to promote an image as a legitimate finance centre. In February 2008, the country's LGT Bank was implicated in a tax-fraud scandal in Germany, which strained the ruling family's relationship with the German government. Crown Prince Alois has accused the German government of trafficking in stolen goods, referring to its $7.3 million purchase of private banking information offered by a former employee of LGT Group.[62][63] The United States Senate's subcommittee on tax haven banks said that the LGT bank, owned by the princely family, and on whose board they serve, "is a willing partner, and an aider and abettor to clients trying to evade taxes, dodge creditors or defy court orders".[64]

Headquarters of Hilti Corporation in Schaan, Liechtenstein

The 2008 Liechtenstein tax affair is a series of tax investigations in numerous countries whose governments suspect that some of their citizens have evaded tax obligations by using banks and trusts in Liechtenstein; the affair broke open with the biggest complex of investigations ever initiated for tax evasion in Germany.[65] It was also seen as an attempt to put pressure on Liechtenstein, then one of the remaining uncooperative tax havens—along with Andorra and Monaco—as identified by the Paris-based Organisation for Economic Co-operation and Development in 2007.[66] On 27 May 2009 the OECD removed Liechtenstein from the blacklist of uncooperative countries.[67]

In August 2009, the British government department HM Revenue & Customs agreed with Liechtenstein to start exchanging information. It is believed that up to 5,000 British investors have roughly £3 billion deposited in accounts and trusts in the country.[68]

In October 2015, the European Union and Liechtenstein signed a tax agreement to ensure the automatic exchange of financial information in case of tax disputes. The collection of data started in 2016. It is another step to bring the principality in line with other European countries regarding its taxation of private individuals and corporate assets.[69]

Tourism accounts for a large portion of Liechtenstein's economy.

Airbnb once offered to rent space for 450-900 guests in Liechtenstein for about US$70,000 per night.[70][71]

The official language is German; spoken by 92% of the population as their main language in 2020. 73% of Liechtenstein's population speak an Alemannic dialect of German at home that is highly divergent from Standard German but closely related to dialects spoken in neighbouring regions such as Switzerland and Vorarlberg, Austria.[74] In Triesenberg, a Walser German dialect promoted by the municipality is spoken. Swiss Standard German is also understood and spoken by most Liechtensteiners.

St. Florin Catholic Cathedral in Vaduz

According to the Constitution of Liechtenstein, Catholicism is its official state religion:

The Catholic Church is the State Church and as such shall enjoy the full protection of the State

— Constitution of Liechtenstein[75]

Liechtenstein offers protection to adherents of all religions, and considers the "religious interests of the people" a priority of the government.[75] In Liechtenstein's schools, although exceptions are allowed, religious education in Catholicism or Protestantism (either Lutheran or Calvinist, or both) is legally required.[76] Tax exemption is granted by the government to religious organizations.[76] According to the Pew Research Center, social conflict caused by religious hostilities is low in Liechtenstein, and so is government restriction on the practice of religion.[77]

According to the 2010 census, 85.8% of the total population is Christian, of whom 75.9% adhere to the Catholic faith, constituted in the Catholic Archdiocese of Vaduz, while 9.6% are either Protestant, mainly organized in the Evangelical Church in Liechtenstein (a United church, Lutheran & Reformed) and the Evangelical Lutheran Church in Liechtenstein, or Orthodox, mainly organized in the Christian-Orthodox Church.[78] The largest minority religion is Islam (5.4% of the total population).[79]

Liechtenstein competes in the Switzerland U16 Cup Tournament, which offers young players an opportunity to play against top football clubs.