Announcement by Hereditary Prince Alois of Liechtenstein atthe National Day celebrations
Liechtenstein's National Day also serves the purpose of reflection on the present and consideration of the future. Not unexpectedly, the tax affair in Germany and its consequences for the Liechtenstein financial center were one of the focuses this year. Hereditary Prince Alois of Liechtenstein announced the willingness of the country to cooperate in tax matters.
As expected, the speech by Hereditary Prince Alois of Liechtenstein on the occasion of National Day 2008 discussed the current developments in the financial center. The Hereditary Prince indicated that, in light of the international trend toward stronger cooperation in tax matters, the time has also come for Liechtenstein to move more forcefully in the direction of cooperation. In the view of the Hereditary Prince, the system of mutual legal assistance and administrative assistance in tax matters should be based on a new foundation. As the Hereditary Prince said, "We should offer all States comprehensive cooperation if they are willing to find sensible solutions with us for the client relationships we have built up, and if they are interested in fair and constructive cooperation for the future."
In his remarks, the Hereditary Prince made clear that Liechtenstein is no longer an offshore center, but rather a financial center with strong growth in onshore business as well as a successful industrial location. "We are not an offshore center as such, but rather have – in addition to the increasingly strong onshore sector of the financial center – an extremely successful industrial sector, which, in terms of economic output and jobs, is considerably larger than the financial sector." Solutions for the prevention of double taxation are therefore a logical and justified concern. Despite the new level of cooperation in tax matters announced by the Hereditary Prince, Liechtenstein will continue to distinguish itself sufficiently from other financial centers. "While many States are introducing the 'transparent citizen', we practice a culture of privacy that goes far beyond bank client secrecy in tax matters."
Hereditary Prince Alois praised the Government's efforts to diversify the financial and business center and to integrate it internationally, especially by signing the Schengen Agreement, negotiating an Anti-Fraud Agreement with the EU, and negotiating the continuation of the QI status with the United States. This offensive strategy of the Government, set out in the "Futuro" vision for the future, was "substantially disrupted by the tax affair staged via the media", Hereditary Prince Alois regrets. Nevertheless, the Hereditary Prince expressed optimism about the future of the Liechtenstein financial and business center, calling for a reform of mutual legal assistance and supervision of the fiduciary sector, in order to reduce the possibilities for abusing the financial center. The Hereditary Prince sees particular opportunities in the area of charitable foundations, insurance, investment funds, and pension funds, which he believes can be marketed more easily if Liechtenstein adopts the European standard with respect to cooperation in tax matters.
Prime Minister Otmar Hasler also spoke out in favor of enhanced cooperation. Free access to the markets requires closer cooperation, Hasler said in an interview with the Liechtensteiner Volksblatt: "For this reason, after the reform to tighten general due diligence obligations for the financial center, the Government took up the topic of stronger international cooperation in the fight against tax offenses." After extensive preparatory work, Prime Minister Hasler believes the time has come to "choose a forward strategy and tackle the questions surrounding untaxed assets." According to Hasler, such a strategy would lead Liechtenstein out of isolation and also give the business location a new perspective. In this context, Prime Minister Otmar Hasler reiterated that Liechtenstein has a very successful and diversified business location that is competitive internationally.
In an interview, Reigning Prince Hans-Adam II expressed a pragmatic view concerning the foreign pressure on the Liechtenstein financial center: "Of course there will always be pressure. At the same time, we should not overestimate the threats, such as those by Germany." With respect to information exchange, the Reigning Prince announced that Liechtenstein is going about as far as Switzerland or Luxembourg in its negotiations. Negotiations and agreements can reduce the pressure from abroad, Reigning Prince Hans-Adam II emphasized. However, one should not forget that Germany has always put pressure on Liechtenstein, since Liechtenstein has always accepted tax refugees and other refugees: "About 40 years ago, a German minister of finance threaten to invade Liechtenstein with the German fire brigade, should we continue to be a tax oasis. Attacks from the tax desert in the north have a long tradition – and still, we remain a tax oasis."
If you would like further information on Liechenstein including current Liechtenstein topics please visit us at www.liechtenstein.li.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
