Liechtenstein is giving up its secrets regarding bank accounts held in the principality. In 2002, the Organisation for Economic Co-operation and Development named Liechtenstein as one of seven “unco-operative tax havens”. In recent months, the Alpine principality has agreed to accept OECD tax transparency standards and started negotiating tax information exchange agreements. This week, an accord was signed with the UK that aims to uncover hidden funds from British investors (estimates of up to £3bn). Liechtenstein hopes its cooperation will help to improve its private banking image and in turn provide an incentive to evaders to voluntarily divulge information about their affairs rather than risk the chance of discovery.
To help reduce the risk of funds being diverted elsewhere, British investors who declare their hidden assets will have reduced penalty fees. Her Majesty's Revenue and Customs (HMRC) will be requesting up to 10 years’ back tax, interest, and a penalty of 10 per cent of the tax bill – instead of up to 100 per cent. However, in turn Liechtenstein’s bankers will identify clients who need to “confirm their tax position with HMRC” and if they reject the offer, their accounts will be closed. The bottom line to potential tax evaders is that Vaduz is no longer a safe haven for their funds.
