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Liechtenstein is currently considering the idea of concluding a withholding tax agreement with Germany, providing for an automatic exchange of tax information.
The tax deal sought by the Liechtenstein government would be based on the withholding tax agreement concluded recently between Germany and Switzerland and would serve to resolve the longstanding dispute between the two countries over undeclared and untaxed ‘black money’ held by German residents in Liechtenstein banks.
The Swiss accord provides for a withholding tax to be levied by the Confederation’s banks and for the product of the tax to be subsequently transferred to the German tax authorities, while at the same time maintaining client anonymity and therefore traditional Swiss banking secrecy. Despite that, Liechtenstein favours a deal providing for an automatic exchange of information. This would both reduce costs and liability issues.
Commenting on the plans, Liechtenstein’s Prime Minister Klaus Tschütscher announced recently that the government is currently conducting ongoing analysis, involving the evaluation of upcoming regulations, the examination of costs as well as liability issues for the individual institutes concerned and their employees.
Arguing in favour of an automatic exchange of information, Tschütscher explained that the introduction of a withholding tax requires many staff who need the necessary qualifications in order to know which tax is due in which country. In addition, protecting client anonymity is not very advantageous for banks if anything goes wrong, Tschütcher stressed. It may then be more efficient and more attractive to exchange data automatically, as the state concerned then incurs all of the expense and liability, the minister ended.
The bilateral tax agreement between Switzerland and Germany has yet to be ratified by the German parliament. The treaty’s future very much hangs in the balance given the continuing staunch resistance from the opposition parties.
Liechtenstein will have to seek an alternative solution in case of failure to adopt the text in the Bundesrat, or upper house, where Germany’s black-yellow coalition government no longer has a majority.
Liechtenstein is currently considering the idea of concluding a withholding tax agreement with Germany, providing for an automatic exchange of tax information.
The tax deal sought by the Liechtenstein government would be based on the withholding tax agreement concluded recently between Germany and Switzerland and would serve to resolve the longstanding dispute between the two countries over undeclared and untaxed ‘black money’ held by German residents in Liechtenstein banks.
The Swiss accord provides for a withholding tax to be levied by the Confederation’s banks and for the product of the tax to be subsequently transferred to the German tax authorities, while at the same time maintaining client anonymity and therefore traditional Swiss banking secrecy. Despite that, Liechtenstein favours a deal providing for an automatic exchange of information. This would both reduce costs and liability issues.
Commenting on the plans, Liechtenstein’s Prime Minister Klaus Tschütscher announced recently that the government is currently conducting ongoing analysis, involving the evaluation of upcoming regulations, the examination of costs as well as liability issues for the individual institutes concerned and their employees.
Arguing in favour of an automatic exchange of information, Tschütscher explained that the introduction of a withholding tax requires many staff who need the necessary qualifications in order to know which tax is due in which country. In addition, protecting client anonymity is not very advantageous for banks if anything goes wrong, Tschütcher stressed. It may then be more efficient and more attractive to exchange data automatically, as the state concerned then incurs all of the expense and liability, the minister ended.
The bilateral tax agreement between Switzerland and Germany has yet to be ratified by the German parliament. The treaty’s future very much hangs in the balance given the continuing staunch resistance from the opposition parties.
Liechtenstein will have to seek an alternative solution in case of failure to adopt the text in the Bundesrat, or upper house, where Germany’s black-yellow coalition government no longer has a majority.
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