Bloomberg News

Liechtenstein Has ‘Long Way’ to Shed Tax Image, Bank Chief Says

January 26, 2012

Jan. 25 (Bloomberg) -- Liechtenstein has a “long way” to go to shed its image as a tax haven as the principality bids to forge an accord with Germany, according to a bank official.

The Alpine state is negotiating a tax agreement with German authorities that will echo an accord signed in September by Switzerland and Germany, Liechtenstein Bankers Association Director Simon Tribelhorn said today. Under that deal, revenue from a withholding tax on interest, dividends and capital gains earned by Germans with offshore Swiss accounts goes to the German treasury while client identities remain secret.

Both Liechtenstein and Switzerland agreed in March 2009 to meet international standards to avoid being blacklisted as a tax haven by the Organization for Economic Cooperation and Development. Liechtenstein started to unwind secrecy after data stolen from LGT Group, the bank owned by the royal family, was used by Germany to prosecute tax evaders in 2008.

“The world has changed very quickly and massively in the last few years,” Tribelhorn said in an interview in Berlin. “For the customer as well as the financial intermediary, undeclared assets have no future.”

Withholding tax agreements, as well as an accord with the U.K. that allows clients to make voluntary disclosures of undeclared assets, must become the basis for Liechtenstein’s banking industry, Tribelhorn said.

“An image campaign can only take hold if deeds follow,” he said. “We’re getting there, but it’s a long way.”

Germany’s agreement with Switzerland to end a dispute over tax evasion faces resistance from the German Social Democratic opposition. A similar U.K.-Swiss accord contains a series of loopholes that mean the British government will only recoup 10 percent of the 4 billion pounds ($6.2 billion) to 7 billion pounds envisaged by the bilateral treaty, the London-based Tax Justice Network said in October.

--Editors: Dylan Griffiths, Steve Bailey.

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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