Move Over Switzerland: Luxembourg and Liechtenstein Are Europe's New Centers of Wealth, Private Banking

Last year, Luxembourg and Liechtenstein became the first countries in the world where per capita incomes surpassed six figures with $ 103,000 and $ 106,000 respectively. See World's Wealthiest Countries. It comes as no surprise as the duchy and principality have recently attracted billions in new offshore money.



The larger of the two, Luxembourg has a half million people and borders Belgium, France, and Germany. Well integrated with the EU community, Luxembourg was one of the original EU members, having long maintained an economic alliance with Belgium and the Netherlands (Benelux). Nearly a quarter of the economy is now directly related to offshore banking and the financial industry.



With over 200 offshore banks and over $800 B in assets, Luxembourg has recently become Europe's top private banking destination, beating Switzerland for the first time in history. Like Switzerland, Luxembourg is perceived as very safe and stable.



Americans without companies registered in Luxembourg can enjoy the tax-free privileges of offshore banking. Because of the 2005 EU Tax Savings Directive, residents of Luxembourg and most EU countries are subject to Luxembourg's extremely high taxes. Opening an offshore account here comes with standard requirements including: a valid passport (and copies), a bank reference, and utility bills.



Liechtenstein



After Panama, Liechtenstein is known for upholding the strictest bank privacy laws in the world. Some Germans often joke that Swiss bankers bite their tongues, but in Liechtenstein they cut them off.



Unlike Luxembourg, Liechtenstein did not sign the EU Tax Savings Directive, thus it had previously attracted more money from EU nations. Now things have changed as the EU has put a lot of pressure on Liechtenstein to release tax information on Germans and British tax refugees. Perhaps, Liechtenstein is still a great tax haven for Americans and Canadians, but no longer for Europeans.



Prince Hans-Adam II, one of the wealthiest world leaders with over $5 B owns LGT Bank, the country's largest. The bank has been subject to frequent German tax evasion investigations in recent years and its banks have drawn international scorn.



Taxes here are relatively low compared to other European nations as both income and corporate local and national tax rates are between 18-20%. Asset taxes are low, between 0.162% and 0.85 %.



What makes both Luxembourg and Liechtenstein great investment destinations isn't just because of the banks. Both countries have wealthy and highly educated consumer bases, and are close to larger neighboring economies (i.e. Germany and France), without all the restrictions, restraints, and high taxes.