Liechtenstein

The Liechtenstein family took its name from a castle south of Vienna and grew rich serving the Habsburgs, with vast estates in Moravia, Bohemia and Austria. What it lacked was a territory directly under the emperor, which it needed for a seat in the imperial Diet. In 1699 it bought the lordship of Schellenberg and in 1712 the county of Vaduz, two small Rhine valley territories; in 1719 the emperor united them as the Principality of Liechtenstein.

For more than two centuries the princes rarely visited. They lived in Vienna and ruled through governors, while the principality stayed a poor farming region of a few thousand people. When Napoleon dissolved the Holy Roman Empire in 1806, Liechtenstein became sovereign almost by accident; it joined the German Confederation and, until 1918, looked towards Austria.

The collapse of Austria-Hungary in 1918 forced a turn west. Liechtenstein adopted the Swiss franc in the early 1920s and signed a customs union with Switzerland in 1923, which still defines everyday life: Swiss prices, Swiss post codes in practice, Swiss customs officers at the Austrian border. In 1938, as Nazi Germany annexed Austria, Prince Franz Joseph II became the first reigning prince to live permanently in Vaduz Castle.

Liechtenstein is one of the few European states where the monarch still governs. Under the constitution, amended by referendum in 2003 at the prince's insistence, the prince can veto laws, dismiss the government and appoint judges; in return, citizens can call a vote of no confidence in him or even vote to abolish the monarchy. Prince Hans-Adam II has been head of state since 1989, and his son, Hereditary Prince Alois, has handled daily affairs as regent since 2004.

Alongside the monarchy runs a Swiss-style direct democracy: 25 members of parliament, frequent referendums and strong local communes. Change can be slow — women received the vote only in 1984 — but the system is stable and popular. When voters in 2012 were asked to limit the prince's veto, a large majority said no.

On 15 August, the national holiday, the princely family invites the whole population to a reception in the castle garden, followed by fireworks over Vaduz. It is the one day ordinary visitors see the castle grounds, and it shows the unusually direct relationship between the family and the country.

Until the mid-20th century Liechtenstein was poor, and many residents emigrated. The turnaround came from two directions. Low taxes and company law drew holding companies and trusts, and the banking sector grew; at the same time, industry flourished — most famously Hilti, maker of construction tools, founded in Schaan in 1941, and Ivoclar, a world leader in dental materials.

The financial sector's secrecy made the country a target of international criticism, and a 2008 data leak of bank clients from Germany forced a change of course. Liechtenstein signed tax-information agreements and now presents itself as a transparent financial centre. Industry, not banking, provides the largest share of jobs.

The economy is so large relative to the population that more than half of the workforce commutes daily from Switzerland and Austria. That is why morning traffic jams on the Rhine bridges are one of the country's few visible problems, and why residence permits are rationed by quota and lottery.

The country is two landscapes. Half lies on the flat floor of the Rhine valley, where the towns, farms and roads are; the other half rises steeply to the east into the Rätikon range, with peaks over 2,500 m and the high valleys of Malbun and Steg. The Rhine itself forms the whole western border with Switzerland, contained by dams since floods in the 19th and early 20th centuries.

In the 13th and 14th centuries, Walser settlers from the Valais in southern Switzerland moved into the high pastures above the valley and founded Triesenberg. They kept their own dialect and building style, and the Walser Museum there preserves the culture. The mountain villages were linked to the valley only by footpaths until roads arrived in the 20th century.

The Liechtenstein Trail, opened in 2019 for the 300th anniversary, crosses all 11 municipalities in about 75 km. Together with the Fürstensteig ridge path and the wetlands of the Ruggeller Riet, it shows that the country's real interest for a visitor lies outside the capital.

The princely family owns one of the world's great private art collections, with works by Rubens, Van Dyck and Rembrandt. Most of it is displayed in the family's palaces in Vienna rather than in Vaduz, but the Kunstmuseum Liechtenstein in its black concrete cube shows modern and contemporary art from the state collection, and the neighbouring Hilti Art Foundation shows classic modernism.

Postage stamps became a small national industry in the 20th century: designed by leading artists and printed to high standards, they earned revenue and made the country known to collectors worldwide. The Postage Stamp Museum in Vaduz is free.

Vaduz itself is a small administrative town rather than a historic city. Its pedestrian Städtle, the government buildings, the neo-Gothic cathedral and the vineyards of the Princely Winery below the castle make a pleasant half day. Culture life is larger than the population suggests, with the TAK theatre in Schaan and music events drawing audiences from both neighbours.

Liechtenstein in 2026 is prosperous, stable and quietly international: a third of residents are foreign nationals, and English is common in its industrial and financial firms. It belongs to the European Economic Area, so its citizens and companies take part in the EU single market without EU membership, while its currency, customs and many services are Swiss. It joined the International Monetary Fund in 2024, one of the last countries to do so.

Social change has come by referendum and parliament rather than protest: registered partnerships in 2011, and same-sex marriage approved in 2024 to take effect in 2025 — check. Housing costs, traffic from commuters and the balance between growth and the small-country character are the everyday political topics.

For a visitor, the practical upshot is simple. There is no border to cross, no currency to learn beyond the franc, and the country can be seen in a day — but a night in the mountains or a stage of the Liechtenstein Trail shows a side most day-trippers miss.