Estonia-Liechtenstein Double Taxation Agreement Enters Into Force, Effective January 1, 2026

Historic Agreement Takes Effect

A significant milestone in the economic relations between Estonia and Liechtenstein has been reached with the official entry into force of their Double Taxation Agreement (DTA) and protocol. The agreement, signed on July 10, 2025, formally entered into force on December 26, 2025. Its provisions will be applicable starting from January 1, 2026.

The Estonian Ministry of Finance announced the DTA's entry into force on December 30, 2025. Concurrently, the Liechtenstein Official Gazette published the full text of the DTA and protocol on December 23, 2025, making the details publicly accessible.

Key Objectives and Benefits

The primary objective of this DTA is to eliminate double taxation on income and capital for individuals and companies operating between Estonia and Liechtenstein. Beyond preventing income from being taxed in both countries, the agreement also includes robust measures to combat tax evasion and fraud.

Officials from both nations have highlighted the anticipated benefits:

• Strengthened Economic Relations: The DTA is expected to foster closer economic cooperation and create new opportunities for businesses.
• Increased Certainty for Businesses: By providing a clear and stable tax environment, the agreement aims to give businesses greater certainty.
• Enhanced Investment Appeal: It is designed to make investment in both Estonia and Liechtenstein more attractive for foreign investors.

Provisions and Scope

The agreement is comprehensive, covering various taxes in both jurisdictions. In Estonia, it applies to income tax, while in Liechtenstein, it covers corporate income tax, personal income tax, real estate capital gains tax, and wealth tax.

Notably, the DTA incorporates provisions aligned with the Base Erosion and Profit Shifting (BEPS) minimum standards. These include measures to:

• Counter treaty abuse
• Prevent the artificial avoidance of permanent establishment status
• Neutralize the effects of hybrid mismatch arrangements
• Improve dispute resolution mechanisms

Furthermore, the agreement sets limits on withholding tax rates. It caps withholding tax on dividends and interest at 10 percent, and on royalties at 5 percent.

A First for Both Nations

This DTA marks the first such agreement between Estonia and Liechtenstein, signifying a new chapter in their bilateral financial relationship. The agreement was signed by Mariin Ratnik, Undersecretary for Economic and Development Affairs for Estonia, and Sabine Monauni, Deputy Prime Minister and Minister of Foreign Affairs of Liechtenstein.