No automatic exchange of information in cases of tax fraud and tax evasion
The Liechtenstein Government, having already developed and advancement strategy in 2008 in order to safeguard the future of the financial market place emphasized with the “Liechtenstein Declaration” its stance regarding the protection of privacy and defense of bank secrecy.
In addition, Liechtenstein affirmed its readiness to accelerate negotiations on agreements regarding tax information exchange in order to have a network of agreements at its disposal as soon as possible. Within the framework of this process Liechtenstein reconfirmed its responsibility not only towards tax claims of other states nut also to the trust of its international clientele. Since March the success of this strategy has been crowned when the OECD recognized Liechtenstein’s compliance with the international tax cooperation standards and removed the Principality from the grey list of noncooperation countries.
Legitimate Protection of Secrecy
In front of a backdrop of efforts to stabilize global economy and international financial systems, Liechtenstein decided on a pro-active strategy and presented itself to the world through the “Liechtenstein Declaration” as a fully responsible and reliable partner. The ratification of and interest tax agreement with the European Union and the completion of a tax agreement with the USA, based on OECD standards, paved the way.
Bank secrecy protection continues contrary to the general misconception that it has been abolished, but, in future, judicial assistance will be afforded not only in the case of tax fraud but also, under certain circumstances, in the case of tax evasion. Previous misconception compared bank secrecy, which was never absolute, with a bank safe.Liechtenstein had, in the past, always given judicial assistance in the case of criminal action.
Model Agreement with the USA
Prior to the “Liechtenstein Declaration” Liechtenstein had, on 8th December 2008, signed an agreement with the USA on cooperation and information exchange on tax matters (TIEA).
The Government declared that this change of paradigm from a restrictive, defensive to a cooperative attitude showed its desire to safeguardLiechtenstein’s Financial Market Place and its economic position in the long term.
From September 2009 the Tax Information Exchange Agreement (TIEA) with the USA served as a guideline to the cooperation agreements which were finalized with a number of other countries. In signing the TIEA agreement, Liechtenstein Banks fulfilled the requirements for the extensions of QI-Status (Qualified Intermediary) which was extended by the USA from 1st January 2010 for a further six years. The judicial assistance law based on the TIEA found the approval of the Liechtenstein Bankers’ Association as it contained clear and, the same time strict regulations guaranteeing legal assistance. The Liechtenstein Bankers’ Association praised as a positive step that, within the framework of the judicial assistance law, and foreseen exchange of information would be based solely on a precise request. Through this law, as before, no sensitive tax data will be given abroad without a targeted and individual request. Consent also came from the export industry which described the legal assistance law as an important building block for constructive cooperation and continuing good relations with the USA.