The territory of Liechtenstein formed at one time (albeit a diminutive) part of the ancient Roman province of Raetia. For centuries this territory, geographically removed from European strategic interests, had little impact on the tide of European history. Prior to the reign of its current dynasty, the region was enfiefed to a line of the counts of Hohenems.

The Liechtenstein dynasty, from which the Principality takes its name (rather than vice-versa), comes from Castle Liechtenstein in faraway Lower Austria, which the family possessed from at least 1140 to the 13th century, and from 1807 onwards. Through the centuries, the dynasty acquired vast swathes of land, predominantly in Moravia, Lower Austria, Silesia and Styria, though in all cases, these territories were held in fief under other more senior feudal lords, particularly under various lines of the Habsburg family, to whom several Liechtenstein princes served as close advisors. Thus, and without any territory held directly under the Imperial throne, the Liechtenstein dynasty was unable to meet a primary requirement to qualify for a seat in the Imperial diet, the ''Reichstag''.

The family yearned greatly for the added power which a seat in the Imperial government would garner, and therefore searched for lands to acquire which would be unmittelbar or held without any feudal personage other than the Holy Roman Emperor himself having rights on the land. After some time, the family was able to arrange the purchase of the minuscule Herrschaft ("Lordship") of Schellenberg and countship of Vaduz (in 1699 and 1712 respectively) from the Hohenems. Tiny Schellenberg and Vaduz possessed exactly the political status required, no feudal lord other than their comital sovereign and the suzerain Emperor.

Thereby, on January 23, 1719, after purchase had been duly made, Charles VI, Holy Roman Emperor decreed Vaduz and Schellenberg were united, and raised to the dignity of Fürstentum (principality) with the name "Liechtenstein" in honour of "his true servant, Anton Florian of Liechtenstein". It is on this date that Liechtenstein became a sovereign member state of the Holy Roman Empire. Ironically, but as testament to the pure political expediency of the purchases, the Princes of Liechtenstein did not set foot in their new principality for several decades.


In 1806, most of the Holy Roman Empire was invaded by Napoleon I of the First French Empire. This event had broad consequences for Liechtenstein: imperial legal and political mechanisms broke down, while Francis II, Holy Roman Emperor abdicated the imperial throne: the Empire itself dissolved. As a result, Liechtenstein ceased to have any obligations to any feudal lord beyond its borders. Modern publications generally (although incorrectly) attribute Liechtenstein's sovereignty to these events. In reality, its prince merely became suzerain as well as remaining sovereign lord.
From 25 July 1806 when the Confederation of the Rhine was founded, the prince of Liechtenstein was a member, in fact a vassal of its hegemon styled protector, French Emperor Napoleon I Bonaparte, until the dissolution of the Confederation on 19 October 1813.

Soon after, Liechtenstein joined the German Confederation (20 June 1815 – 24 August 1866, presided by the Emperor of Austria).

Until the end of World War I, Liechtenstein was closely tied first to the Austrian Empire and then to Austria-Hungary. However, the economic devastation caused by WWI forced the country to conclude a customs and monetary union with its other neighbour, Switzerland. The Army was disbanded already in 1868, out of financial considerations. At the time of the dissolution of the Austro-Hungarian Empire, it was argued that Liechteinstein as a fief of the Holy Roman Empire (supposedly still incarnated in Liechtensteiner eyes at an abstract level in the person of the then-destitutued Austro-Hungarian Emperor, despite its formal dissolution in 1806) was no longer bound to Austria, then emerging as an independent state which did not consider itself as the legal successor to the Empire. Liechtenstein is thus the last independent state in Europe which can claim an element of continuity from the Holy Roman Empire.


During World War II, Liechtenstein remained neutral, while family treasures within the war zone were brought to Liechtenstein (and London) for safekeeping. At the close of the conflict, Czechoslovakia and Poland, acting to seize what they considered to be German possessions, expropriated the entirety of the Liechtenstein dynasty's hereditary lands and possessions in Bohemia, Moravia and Silesia — the Princes of Liechtenstein lived in Vienna until the Anschluss of 1938. The expropriations (subject to modern legal dispute at the World Court) included over 1,600 square kilometres (600 sq. mi) of agricultural and forest land, including also several family castles and palaces. It is thus little wonder that during the decades of the Cold War, citizens of Liechtenstein were forbidden by Czechoslovakia from even entering that country.

In dire financial straits following the war, the Liechtenstein dynasty often resorted to selling family artistic treasures, including for instance the priceless portrait "Ginevra de' Benci" by Leonardo da Vinci, which was purchased by the National Gallery of Art of the United States in 1967. However, the economic condition of Liechtenstein improved rapidly. During the decades following, Liechtenstein prospered, its economy modernizing with the advantage of low corporate tax rates which drew many companies to the country.

The Prince of Liechtenstein is the world's 5th wealthiest head-of-state, with an estimated wealth of 4 billion dollars. The country's population enjoys one of the world's highest standards of living.

Despite its small geographic area and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy, and boasts a financial service sector and also living standard which compare favourably to those of the urban areas of Liechtenstein's large European neighbours. Advantageously low business taxes – the maximum tax rate is 18% – as well as easy Rules of Incorporation have induced about 73,700 holding (or so-called 'letter box') companies to establish nominal offices in Liechtenstein. Such processes provide about 30% of Liechtenstein's state revenue.

Recently, Liechtenstein has shown strong determination to dispel the country's unhelpful image as a center for international money-laundering.

Liechtenstein participates in a customs union with Switzerland and employs the Swiss franc as national currency. The country imports more than 90% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between the European Free Trade Association (EFTA) and the European Union) since May 1995. The government is working to harmonize its economic policies with those of an integrated Europe. Since 2002, Liechtenstein's rate of unemployment has doubled, although it stood at only 2.2% in the third quarter of 2004. Currently, there is only one hospital in Liechtenstein, the Liechtensteinisches Landesspital in Vaduz. The GDP (PPP) is 1.786$ Billion (CIA Factbook) and 54000$ per person.

Liechtenstein most recognizable international company, and largest employer is Hilti, a manufacturer of concrete fastening systems. Liechtenstein is also the home of the Curta calculator.

Nominal: The GDP had 2001 4,2 Billion Franken. Per Person 120.000 Franken (80.000 Euro).