Liechtenstein

• 1. Introduction

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  In March 2007, a Swiss infantry unit of 170 men lost its way during a training exercise and accidentally crossed into Liechtenstein. The soldiers had marched 1.5 kilometres into foreign territory before they realised their mistake and turned back. Switzerland later sent official apologies. A spokesperson at the Liechtenstein ministry answered with a shrug: "No problem, these things happen."

  The country on the receiving end covers just over 160 square kilometres of the Central European Alps. It sits between Austria and Switzerland, has a population of about 41,000, and is ruled by a prince. Hans-Adam II has held that role since 1989. The capital is Vaduz and the official language is German.

  How does a country this small stay independent for three centuries? How did a noble family come to give its name to a state that none of its members visited for years? Why does a nation without a real army still have a force that could pass for one? And how did a place famous for quiet banking end up in a diplomatic fight with Germany?

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• 2. Alpine Ground

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  The Rhine runs along the entire western edge of Liechtenstein, a stretch of about 27 kilometres that separates it from Switzerland. Measured from south to north, the country is only about 24 kilometres long. It is wholly surrounded by other landlocked countries, a rare condition shared only with Uzbekistan. Surveys in 2006 added half a square kilometre to the country's official size and put its borders at 77.9 kilometres.

  About half the territory is mountainous. The Grauspitz is the highest point at 2599 metres above sea level, while the Ruggeller Riet marks the lowest at 430 metres. The country has 32 mountains of at least 2000 metres. The Naafkopf, at 2570 metres, is where Liechtenstein, Graubünden and Vorarlberg meet. The Falknishorn, at 2452 metres, marks the southernmost point.

  The warm, dry foehn wind of autumn softens the climate, and winter days around 15 degrees Celsius are not unusual. Orchards, meadows and vineyards fill the valley. Snow still draws visitors, and the single ski area is Malbun. In 1980, Hanni Wenzel won two gold medals and a silver at the Winter Olympics, after taking bronze in 1976. Her brother Andreas and her daughter Tina Weirather also won medals. Liechtenstein has ten medals in total, all from alpine skiing. That gives it more Olympic medals per capita than any other nation, and it is the only country to medal at the Winter Games but never the Summer Games.

  People have lived on this ground for a very long time. The oldest traces of human presence date to the Middle Paleolithic era, and farming villages appeared in the valleys around 5300 BC. By about 450 BC the Hallstatt and La Tène cultures flourished here, and the Vennones occupied the Alpine Rhine valley. In 58 BC, Julius Caesar defeated the Alpine tribes at the Battle of Bibracte. By 15 BC, Tiberius and his brother Drusus had conquered the whole Alpine region, and the land joined the Roman province of Raetia. The Romans built a road through it and kept legionary camps at Brigantium, now Bregenz in Austria, and at Magia, now Maienfeld in Switzerland.

  Around 260 AD the Alemanni, a Germanic people, destroyed Brigantium, and they settled the area around 450. In 504, Clovis I defeated them at Tolbiac and brought the region into the Frankish Empire. The Treaty of Verdun in 843 divided the Carolingian lands, and the territory fell to East Francia. Romansch was the main language until about 1100, and then German gained ground. In 1300, the Walsers arrived from Valais, and the village of Triesenberg still preserves their dialect. Then, in 1396, Vaduz won imperial immediacy, which meant it answered to the Holy Roman Emperor alone.

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• 3. Buying a Country

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  The family that gave Liechtenstein its name took it from a castle south of Vienna, in Lower Austria. They held that castle from at least 1140 until the 13th century, and again from 1807.

  Their estates lay mostly in Moravia, Lower Austria, Silesia and Styria. Each was held from a more senior lord, often a branch of the Habsburgs. That arrangement kept the family out of the Reichstag, the imperial parliament. Several Liechtenstein princes served Habsburg rulers as close advisers. Yet with no land held directly from the emperor, they had little real power.

  The family therefore went looking for land that was unmittelbar, meaning held with no lord in between. In the early 17th century, Emperor Matthias made Karl I of Liechtenstein a Fürst, or prince, after Karl sided with him in a political battle. Hans-Adam I then bought the tiny Lordship of Schellenberg in 1699, and the county of Vaduz in 1712, both from the Hohenems. These two scraps of land had exactly the status the family wanted, since neither had any master except the emperor.

  On the 23rd of January 1719, Emperor Charles VI united Vaduz and Schellenberg and raised them to an imperial principality. He chose the name Liechtenstein in honour of "his true servant, Anton Florian of Liechtenstein". From that day, the territory was a mostly sovereign member state of the Holy Roman Empire. Yet it would take until 1818 before any member of the family, Prince Aloys, set foot in the principality that bore its name.

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• 4. Outliving Empires

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  Napoleon's crushing victory at Austerlitz in 1805 left the Holy Roman Empire under effective French control. In 1806, Emperor Francis II abdicated and dissolved the empire, ending more than 960 years of feudal government. Liechtenstein suddenly owed obedience to no lord beyond its own borders.

  From the 25th of July 1806, the prince belonged to Napoleon's Confederation of the Rhine, in effect as a vassal of the French emperor. That arrangement ended with the confederation's dissolution on the 19th of October 1813. Liechtenstein then joined the German Confederation, which ran from the 20th of June 1815 to the 23rd of August 1866 and was presided over by the Emperor of Austria. In 1818, Prince Johann I granted the territory a limited constitution. When the German Confederation dissolved in 1866, Liechtenstein became fully independent.

  The late 19th century brought modern links. A railway line between Switzerland and the Austro-Hungarian Empire opened through the country in 1872. In 1884, Johann II appointed an Austrian aristocrat, Carl von In der Maur, as governor. Two bridges over the Rhine to Switzerland followed in 1886.

  The ruling princes still drew much of their wealth from estates in Habsburg lands, and they spent much of their time at their two palaces in Vienna. During World War I, Liechtenstein officially stayed neutral but depended on its neighbours. Prince Heinrich of Liechtenstein worked for Austria-Hungary. The economic devastation of the war forced the country into a customs and monetary union with Switzerland. Popular unrest from the same hardship led directly to the putsch of November 1918. That upheaval began the process that produced a new constitution, based on constitutional monarchy, in 1921.

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• 5. Neutrality Under Pressure

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  In 1929, the 75-year-old Prince Franz I took the throne, having just married Elisabeth von Gutmann. She was a wealthy woman from Vienna, and her father was a Jewish businessman from Moravia. Liechtenstein had no official Nazi party, but a Nazi sympathy movement grew inside the National Union party. Local sympathisers singled her out as their Jewish "problem", and pro-Nazi agitation lasted through the 1930s.

  In March 1938, just after Nazi Germany annexed Austria, Franz named his 31-year-old grandnephew, Prince Franz Joseph, as regent. Franz then moved to Feldsberg in Czechoslovakia. He died there on the 25th of July at Castle Feldberg, and Franz Joseph formally succeeded him. In March 1939, a coup was attempted while Franz Joseph II was on a state visit to Berlin.

  During World War II, the country stayed officially neutral and looked to Switzerland for help and guidance. Family treasures from dynastic lands in Bohemia, Moravia and Silesia were brought to Liechtenstein for safekeeping. Operation Tannenbaum, the Nazi plan to conquer Switzerland, also covered Liechtenstein. The Nazi dream of uniting all German speakers would have swallowed its people as well. In 1944, after the Allied invasion of France, the plan was abandoned, and the country was spared occupation.

  Peace brought a different loss. Czechoslovakia and Poland, seizing what they saw as German property, expropriated every holding of the dynasty in those three regions. The seizures covered more than 1600 square kilometres of farmland and forest, an area many times larger than Liechtenstein itself. They also took several family castles and palaces, and the Lednice-Valtice Cultural Landscape, a UNESCO-listed site, was the most notable. The legal dispute reached the International Court of Justice.

  The dynasty was in dire financial straits and often sold family treasures. In 1967, the National Gallery of Art in the United States bought Leonardo da Vinci's portrait Ginevra de' Benci for 5 million, then a record price for a painting. In 2005, a government-commissioned investigation found that Jewish slave labourers from the Strasshof concentration camp, supplied by the SS, had worked on Austrian estates owned by the Princely House. The report found no evidence that the House knew of it, but concluded that it bore responsibility.

  During the Cold War, citizens of Liechtenstein were forbidden to enter Czechoslovakia. The quarrel over the Beneš decrees meant no diplomatic relations with the Czech Republic or Slovakia. Relations with the Czech Republic began on the 13th of July 2009, and with Slovakia on the 9th of December 2009.

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• 6. Prince and Parliament

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  In March 2003, voters approved a constitutional referendum that widened the prince's powers. He gained broad veto authority, the power to dismiss the government, and the ability to rule by emergency decree. The BBC described the result as "Europe's only absolute monarchy". The Venice commission of the Council of Europe reported that several provisions did not fit European democratic standards. In a further referendum in 2012-76% of voters rejected a proposal to limit the princely veto over laws approved by referendum.

  The system is stranger than that label suggests. An elected parliament passes laws, but citizens can also propose and adopt laws and constitutional changes without it. In 2025, Freedom House ranked Liechtenstein 64th of 194 countries for political rights and 20th for civil liberties. It noted that human rights and civil liberties are generally well protected despite the prince's large role.

  The Landtag has 25 members serving terms of up to four years. Fifteen come from the Oberland, the upper country, and ten from the Unterland, the lower country. A party needs at least 8% of the national vote to win seats, which is enough for two. The government has a prime minister and four government councillors, appointed by the prince on parliament's proposal. At least two of them must come from each region. Judges sit in courts at Vaduz, and the five members of the Constitutional Court are appointed by the reigning prince.

  Succession is handled early. In 2004, Hans-Adam II handed day-to-day government to his eldest son, Hereditary Prince Alois, as regent, just as his own father had done for him in 1984. In April 2025, the country elected its first female prime minister, Brigitte Haas.

  On the 1st of July 1984, Liechtenstein became the last country in Europe to grant women the vote. Referendums in 1968-1971 and 1973 had rejected the idea. The 1984 vote, open only to men, passed with 51.3% in favour. Legislation allowing same-sex marriage passed in 2024 and took effect in 2025.

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• 7. No Army, Many Allies

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  In 1866, Liechtenstein sent an army of 80 men to the Austro-Prussian War, and none of them saw any fighting. The unit numbered 81 on its return, because an Italian military liaison had come home with it. The collapse of the German Confederation freed the country from any duty to keep an army. Parliament refused to pay for one. The prince objected, since the move left the country defenceless, but he gave in and disbanded the force on the 12th of February 1868. The last soldier to serve under the colours of Liechtenstein, Andreas Kieber, died in 1939 at age 94.

  Today the National Police keep order with 87 field officers and 38 civilian staff, a total of 125 people. Inside the police sits the Princely Liechtenstein Security Corps, a paramilitary unit that provides heavy backup and honour guards at the palace. It might serve as a de facto army in an invasion, and the country can restore a military if needed. Crime is among the lowest in the world. The prison holds few, if any, inmates, and anyone sentenced to more than two years is sent to Austrian jurisdiction.

  In 1985, the Swiss Army fired shells during an exercise and accidentally burned a patch of forest inside the country. The matter was said to have been settled "over a case of white wine".

  Without political or military power, Liechtenstein has protected its sovereignty over three centuries by joining legal communities. A Customs Treaty with Switzerland followed in 1923. Switzerland has handled most of the country's consular representation since then, and it has had an ambassador accredited to Liechtenstein since 2000, though he lives in Bern. Liechtenstein joined the Council of Europe in 1978 and the United Nations in 1990 as its 160th member. It joined the European Free Trade Association in 1991 and the European Economic Area in 1995. In 2008, it entered the Schengen and Dublin agreement together with Switzerland. Most recently, on the 21st of October 2024, it became a member of the International Monetary Fund.

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• 8. Money and Reputation

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  The Prince of Liechtenstein is the world's seventh wealthiest monarch, with an estimated 3.5 billion. His country has more registered companies than citizens, despite few natural resources. It uses the Swiss franc under its customs union with Switzerland, and it is one of the few countries with no debt. Estimated output in 2021 came to $184,083 per person. Unemployment stood at 1.5% in 2008, and the country imports about 85% of its energy. It has only one hospital, in Vaduz.

  Hilti, a maker of direct fastening systems and other high-end power tools, is the best-known international company and the largest employer. Factories also produce electronics, precision instruments, anchor bolts, calculators and pharmaceuticals. Farms in both the Oberland and the Unterland grow wheat, barley, corn and potatoes, and they raise livestock and make wine.

  Taxes are modest. The basic personal income tax rate is 1.2%, and it reaches 17.82% once the communes add their share. Corporate profits are taxed at 12.5%.

  For years, the country earned large revenues from Stiftungen, or foundations, which hid the true owner of foreigners' assets. A foundation was registered in the name of a Liechtensteiner, often a lawyer. That system made the principality a favourite tax haven for the extremely wealthy. In February 2008, the princely family's LGT Bank was implicated in a tax-fraud scandal in Germany. The German government had paid $7.3 million for private banking data offered by a former LGT employee. Crown Prince Alois accused Germany of trafficking in stolen goods. A United States Senate subcommittee called the bank "a willing partner, and an aider and abettor to clients trying to evade taxes, dodge creditors or defy court orders".

  The affair set off tax investigations in many countries. It also added pressure on a country the OECD had listed in 2007 as uncooperative, along with Andorra and Monaco. The OECD removed Liechtenstein from its blacklist on the 27th of May 2009. On the 2nd of September 2009, Germany and Liechtenstein signed an agreement on exchanging tax information. In August 2009, British tax authorities agreed to share information too. Up to 5,000 British investors are believed to hold roughly £3 billion there. In October 2015, the European Union and Liechtenstein signed an agreement on automatic exchange of financial information, and data collection began in 2016.

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