LEX Coming soon to a tax haven near you: the taxman. Now, Liechtenstein is giving up its secrets. The net had been closing in ever since the Organisation for Economic Co-operation and Development in 2002 named it among seven “unco-operative tax havens”. The stigma was erased when the Alpine principality accepted OECD tax transparency standards in March and started negotiating tax information exchange agreements. On Tuesday it signed an accord with the UK that aims to uncover up to £3bn salted away by British investors. Vaduz hopes its co-operation with other tax jurisdictions will provide more incentive to evaders to clean up their affairs than the threat of discovery, and that Liechtenstein’s private banking image will improve.
It has given the industry some protection by negotiating a carrot-and-stick scheme that could reduce the risk of funds leaching elsewhere. British investors who declare their Liechtenstein lolly pay HM Revenue & Customs 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 “when the HMRC catches up with them”. That is the easy option. Now, the stick: Liechtenstein’s bankers will identify clients who need to “confirm their tax position with HMRC”; if they cannot come clean, their accounts will be closed. The message is clear: Vaduz is no longer a safe haven for tax fraudsters.
