Originally published on 24 July 1999
At the end of the first world war the Principality of Liechtenstein was the poor house of Europe. As a result of the monetary union with the Austro-Hungarian Empire, the total collapse of the Austrian monetary system brought Liechtenstein to the edge of ruin. The financial situation of the state was so desolate that a consortium consisting of four major Swiss banks was not prepared to give the country a long term loan in the amount of 1 million Swiss francs.The economy only improved with the conclusion of a customs union and a monetary union with the Swiss Federation in 1924. Today Liechtenstein and Switzerland have one of the highest per capita incomes worldwide. In order to facilitate the economic recovery a new tax-law was introduced in 1923. This law which has been amended several times provides for special tax privileges for offshore-companies. Along with the new companies law contained in the Persons and Companies Law enacted in 1926, the government pursued a policy of attracting foreign investment.
Since, the financial services sector has become the most important sector. It employs almost 1/3 of all employees and creates directly or indirectly approximately 60 % of the state revenues.
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