Double Tax Treaty with Austria has been effective
since 1970. The Treaty applies to resident individuals,
companies transacting commercial business (ie not
investment business), and holding companies, providing
these can prove that at least 51% of their capital
is held by Liechtenstein citizens.
Liechtenstein International Criminal
subscribes to the European Convention on Co-operation
in Criminal Matters through its own Law on International
Co-operation in Criminal Matters. Foreign investigators
may petition the Court for the authorities to conduct
investigations; there is an appeal procedure against
such a Court Order.
no agreements between Liechtenstein and other countries
regarding fiscal matters, and the authorities reject
requests for information concerning alleged tax evasion.
in early 2000 Liechtenstein's reputation as an offshore
centre was tarnished by a number of money-laundering
cases and in March 2000 the government announced a
package of reform measures to tackle the problem,
to include major revisions to the law covering the
duty of care, changes to the penal code and the code
of criminal procedure and a complete re-organisation
of procedures for giving international legal assistance.
In addition, the Financial Services Department was
split into two, one part dealing with the capital
markets and the other with financial services. The
measures were implemented from the beginning of 2001.
Intelligence Unit was also established as an early
warning system for potential abuse of the country's
banking secrecy. In March 2002, the principality's
Parliament unanimously approved a new law specifying
the competencies and duties of the FIU, which had
previously operated on the basis of a statutory instrument.
clarified the procedures which the body should use
in order to procure and analyse information on potential
and actual money laundering activity, and confirmed
its position as an essential element of the amended
regulatory system put in place in Liechtenstein's
financial sector in the wake of OECD demands and the
September 11 attacks.
allows the FIU to cooperate and exchange information
with authorities in Liechtenstein and abroad, and
provides for it to solicit assistance from foreign
FIUs and other regulatory bodies.
March 2001 Italy, Switzerland, France, Germany, Austria
and Liechtensten agreed to collaborate more closely
to combat money laundering activities at a meeting
held in Sicily.
Metzler, Switzerland's justice and police minister
said that regular meetings between the law enforcement
authorities of each country were agreed upon and the
ministers discussed the logistics of enhanced cross
border cooperation over money laundering investigations.
July, 2002, the United States and Liechtenstien signed
a mutual legal assistance treaty designed to combat
money laundering and terrorist financing. The agreement
facilitates foreign investigations into tax fraud,
money laundering, and other financial crimes; however
simple tax evasion does not fall under the remit of
the agreement, as the result of a Liechtenstein law
which states that the non-payment of taxes is an administrative
matter into which foreign investigators may not probe.
September, 2002, Liechtenstein's Head of Government,
Otmar Hasler also confirmed that the Principality
had recently concluded an agreement with Monaco over
the prevention of money laundering and terrorist financing.
US mutual assistance treaty has been ratified by both
countries, and came into force in August, 2003.
December 2008, it was announced that the
United States and Liechtenstein had signed an agreement
to allow for the exchange of information on tax matters
between the two countries.
agreement was signed by US Charge d'Affairs, Leigh
Carter and Liechtenstein PM, Otmar Hasler in Vaduz,
TIEA was designed to allow for the exchange of information
relating to 2009 and the years following. Documents
or other information created before 2009 can be obtained,
provided that the request relates to an investigation
of a post-2008 year. In the case of pre-2009 years,
information can be exchanged regarding criminal tax
matters under the US-Liechtenstein Mutual Legal Assistance
further emerged that as part of the signing of the
TIEA, the United States would be extending Liechtenstein's
treatment as an eligible Qualified Intermediary (QI)
jurisdiction until December 31, 2009.
US Treasury explained that:
one-year extension is intended to provide Liechtenstein
with time to enact the legislation necessary for full
implementation of the TIEA. If Liechtenstein fully
implements the TIEA by the end of 2009, Liechtenstein's
QI status will be renewed for the standard six-year
QI program generally allows financial institutions
that are located in an eligible QI jurisdiction to
enter into an agreement with the IRS in which the
foreign financial institution assumes certain documentation
and withholding responsibilities in exchange for simplified
information reporting for its non-US account holders."
2009, Liechtenstein signed the Council of Europe Criminal
Law Convention on Corruption
Criminal Law Convention calls for the criminalization
of a wide range of forms of corruption (such as active
and passive bribery of domestic, foreign, and international
officials and members of parliament, as well as private
bribery). The Convention also contains provisions
on international mutual legal assistance relating
to corruption and the laundering of proceeds from
Convention provides for regular reviews of its implementation
in signatory states by the Group of States against
Corruption (GRECO). Accession to the Convention automatically
entails membership in GRECO. To further improve Liechtenstein’s
reputation, this membership was brought forward to
January 1, 2010.
the same time, the Second Additional Protocol of November
8, 2001 to the European Convention on Mutual Assistance
in Criminal Matters was signed by Liechtenstein. The
Additional Protocol modernizes the Convention, which
dates from the year 1959 and entered into force for
Liechtenstein on January 26, 1970.
provisions of the updated protocol are largely based
on the EU Mutual Assistance Convention of May 29,
2000, and the Convention of June 19, 1990, implementing
the Schengen Agreement (e.g. questioning by video
and telephone conference, return of criminal goods,
and cross-border observation). In both cases, the
ratification process should be concluded in 2010.
United States, France, Germany, the United Kingdom,
Ireland and Luxembourg have already concluded agreements
with Liechtenstein, and a multilateral European Union
(EU) Anti-Fraud Agreement has also been agreed in
principle. Liechtenstein expects a speedy approval
of this EU agreement.
April 1, 2009, senior representatives of the Liechtenstein
government and the UK's HM Revenue and Customs met
to discuss how to take forward increased tax transparency
between the UK and Liechtenstein.
has asked for technical assistance from the UK to
help determine the identity of UK residents with beneficial
interests in Liechtenstein structures and bank accounts.
Not surprisingly, the move has been welcomed by the
UK recognised and supported the efforts Liechtenstein
is making to transform its financial services industry.
Legal certainty for UK taxpayers, for Liechtenstein
and the Liechtenstein financial centre will be part
of the discussion," said an HMRC statement.
UK and Liechtenstein agreed to move forward quickly
to reach a formal tax information agreement in the
Timms UK Financial Secretary to the Treasury said:
"The outcome of these discussions demonstrates
that we are fast moving forward into a new era of
transparency and openness in global tax administration,
founded on exchange on tax information. This is good
news both in terms of the interests of the majority
of honest taxpayers who pay their fair share and also
in protecting the revenues that fund our vital public
Hartnett, Permanent Secretary for Tax at HMRC commented:
"These were unprecedented discussions and we
are looking forward to more detailed talks. We are
grateful to the Liechtenstein government for their
efforts to conclude an information agreement between
Liechtenstein and the United Kingdom."
added: "This is a further vital step in ensuring
that dishonest taxpayers have no place to hide, while
enabling honest taxpayers to legitimately engage with
the Liechtenstein financial services industry."
announcement followed the 'Liechtenstein Declaration'
on March 12, when the Principality pledged to conform
to OECD standards on transparency and seek out new
tax agreements with other countries and jurisdictions.
August 2009, the UK government announced details of
the “groundbreaking” disclosure agreement
with Liechtenstein that gives UK taxpayers with undisclosed
accounts in the Alpine jurisdiction the opportunity
to disclose income at a reduced penalty, or face having
their accounts shut down.
so-called Liechtenstein Disclosure Facility (LDF)
agreement, signed by the two governments on August
11 along with a broader Tax and Information Exchange
Agreement, will allow penalties on unpaid tax to be
capped at 10% of tax evaded over the last 10 years
providing that the account holder makes a full disclosure
to HM Revenue and Customs (HMRC).
those who do not make a full disclosure by the end
of the program, which runs from September 1, 2009
to March 31, 2015, will find their Liechtenstein accounts
closed down. They may also face penalties on any unpaid
tax of up to 100%.
September 2009, Liechtenstein and Luxembourg signed
a double taxation agreement in line with OECD standards
for tax transparency.
Finance Minister, Luc Frieden and Liechtenstein's
Prime Minister, Klaus Tschutscher signed the double
taxation agreement in Vaduz.
same month, Liechtenstein initialled the text of a
DTA with San Marino, agreed to commence DTA negotiations
with the Czech Republic, agreed the text of TIEAs
with Andorra and Monaco, and concluded a TIEA with
France. September 2009 also saw the approval by Liechtenstein's
legislature of the TIA with the US.
the following month, further TIEAs were signed with
St Vincent and the Grenadines, and Ireland.
Irish TIEA was expected to enter into force from 2010,
provided the two countries had completed their individual
ratifications procedures by the end of 2009.
signing is another consistent step on Liechtenstein's
path of international cooperation in tax matters.
With this step, we are also intensifying our relations
with Ireland," said Liechtenstein's Prime Minister,
addition to concluding the agreement, Liechtenstein
and Ireland also agreed to continue talks on closer
cooperation between the two countries. The goal is
to conclude a double taxation agreement as soon as
signed two further tax information exchange agreements
containing the OECD standard, on the sidelines of
a European Council of Finance Ministers (Ecofin) meeting
held in Brussels in November 2009.
the meeting, Liechtenstein reiterated its willingness
to implement the current OECD standard as part of
bilateral tax agreements and at the level of a multilateral
agreement with the European Union (EU) and its member
administrative assistance agreements with the Netherlands
and Belgium provide for a cross-border tax cooperation
procedure governed by the rule of law. The treaty
texts follows the OECD Model Tax Convention and provide
for the exchange of information upon request.
the signing, Tschütscher announced: "Beyond
today's conclusion of the agreements, we agreed talks
with both countries to immediately begin negotiations
about the conclusion of double taxation agreements."
has also emerged that negotiations with additional
countries, including Italy, Australia, Norway, Sweden,
Finland, and Iceland, were at an advanced stage.
was said at the time that Liechtenstein’s government
was also aiming to continue talks with several existing
partners on additional OECD-compliant double taxation
agreements and to assume negotiations with new partners.
goal is to ensure legal certainty for clients and
intermediaries as well as reliable and forward-looking
framework conditions in tax matters," added Tschütscher.
following month, it emerged that the TIEA between
Liechtenstein and the US went into force on December
4, 2009, following appropriate notification by the
was anticipated that the agreement would enter into
effect from January 1, 2010.
a result of the agreement, the US extended the Qualified
Intermediary (QI) status for Liechtenstein banks by
a further six years until December 2015. As a Qualified
Intermediary, financial intermediaries may continue
to deal in US securities. The extension of the QI
status was part of negotiations with the US on the
TIEA that were successfully concluded in December
as a financial center will hereby benefit from greater
long-term planning security,” explained Liechtenstein
Prime Minister, Klaus Tschütscher. “This
is good for our banks and also for our banks’
March 2010, it emerged that Germany’s Cabinet
had approved a bill pertaining to the bilateral tax
information exchange agreement with Liechtenstein.
According to a statement from the German Finance Ministry,
the agreement was to be incorporated into national
TIEA was signed on September 2, 2009, in Vaduz, by
Germany’s ambassador Axel Berg and Liechtenstein’s
Prime Minister Klaus Tschütscher.
TIEA contains the OECD standard, and provides that
information will be exchanged upon request. This will
enable tax information to be exchanged not only in
cases of tax evasion, but also as part of standard
assessment procedures, without the need for the state
concerned to present suspicion of a tax crime.
Liechtenstein government announced in March 2010 that
negotiations for a convention for the avoidance of
double taxation and fiscal evasion with Hong Kong
had been concluded, and a text initialled.
agreement is based on the OECD Model Convention for
avoiding double taxation and, according to the Liechtenstein
government, is tailored to the needs of a "dynamic
economic relationship characterized by a low tax burden."
was expected that the agreement would be signed some
weeks after the conclusion once it has been approved
by the respective governments. The agreement will
then need to be ratified by the respective countries,
and will apply to tax years after entry into force.
this agreement, we are creating enhanced legal certainty
in our economic relations with Hong Kong and are opening
new perspectives for the Liechtenstein industry and
financial centre in the Asian growth market,"
said Prime Minister Klaus Tschütscher, noting
that it will be of great mutual benefit to businesses
that month, it emerged that chief negotiators from
Liechtenstein and Uruguay had initialled an OECD-compliant
bilateral double taxation agreement between the two
countries, thus marking an end to the negotiations.
text of the agreement provides for information exchange
agreement, due to be signed shortly, will enter into
force upon completion of the respective domestic ratification
procedures, and will apply for tax years following
its entry into force.
this point, Liechtenstein had signed 15 agreements
facilitating the exchange of tax information.
a statement released in 2010, Liechtenstein’s
Prime Minister Klaus Tschütscher announced that
the government’s had adopted a proposal to create,
at national level, the necessary legal basis with
which to implement the international OECD standards.
Swift implementation of these agreements will create
a sustainable environment for the country’s
financial centre and provide legal certainty for both
customers and agreement partners, he added.
to the government, within the framework of the signed
agreements, the adopted, OECD compliant Tax Assistance
Act provides for information exchange on the basis
of specific requests, in individual cases. The government
points out, however, that cooperation in tax matters
will only take place provided that precise information
regarding the identify of the taxpayer is submitted,
together with the facts of the case, thus ruling out
an automatic exchange of information (so-called “fishing
expeditions”) and assistance based on information
which has been illegally obtained.
order to implement the agreement with Great Britain
concluded on August 11, 2009, a special law has been
adopted. Liechtenstein has ensured, through its Assistance
and Compliance Program, that taxpayers in the UK,
with accounts held in the Liechtenstein financial
centre, fulfil their tax obligations at home. The
adopted law sets the rules for implementing the compliance
parliament is due to negotiate and adopt the draft
law before the summer break in 2010.
a two-day visit to Germany in April 2010, Liechtenstein’s
Hereditary Prince Alois von und zu Liechtenstein held
talks in Berlin with Germany’s Federal President
Horst Köhler, focussing predominantly on bilateral
cooperation in tax matters.
to the Liechtenstein government, this first official
meeting between the two heads of state marks a new
phase in the relationship between the two countries,
which began following the conclusion of a bilateral
tax information exchange agreement in September 2009,
and is being further developed in the ongoing negotiations
on an additional bilateral double taxation agreement.
talks centred on the current situation, as well as
on the further development of cooperation. Liechtenstein’s
Hereditary Prince Alois took the opportunity during
the course of the discussions to emphasize the progress
made between the two states and to praise the intensive
bilateral exchange. The heads of state also explored
the impact of the global financial crisis on both
countries, and discussed collaboration both within
Europe and other international organizations.
March 2010, the Swiss Federal Council announced its
approval of both the message and draft federal decree
pertaining to the treaty on environmental taxes between
Switzerland and Liechtenstein.
the terms of the new treaty, signed on January 29,
Liechtenstein will apply the same environmental taxes
as its Swiss neighbour.
1920, Switzerland and Liechtenstein created a common
economic and monetary area. According to the Customs
Treaty of 1923, Swiss customs legislation, and indeed
other federal legislation connected to the customs
union, are also applicable in Liechtenstein.
a bid to protect the environment, Switzerland introduced
in 1998 environmental taxes designed to encourage
environmentally-friendly behaviour through financial
and tax incentives for materials and products, notably
organic compounds, “extra light” heating
oil, as well as diesel. In 2008, Switzerland then
elected to introduce a tax levied on carbon dioxide
emissions resulting from the use of fossil fuels.
these environmental taxes are not related to customs
tax, given the close economic relations between Switzerland
and Liechtenstein, and in order to avoid unfair competition,
both the Liechtenstein and Swiss government agreed
that the taxes should be similarly applied in Liechtenstein.
new Treaty provides the basis for the application
of these environmental taxes, as a separate convention.
Up until now, this was covered, as a temporary measure,
under the Customs Treaty.
application provisionally as from February 1, 2010,
the new Treaty has yet to be approved by the Swiss
parliament, and is subject to an optional referendum
on international treaties.