Liechtenstein foundations and tax evasion are two entirely different things.
According to German tax authorities, taxes have been evaded in Liechtenstein using foundations. Amplified by media reports, this gives the impression that Liechtenstein foundations are used only for tax evasion by German citizens. "We decisively reject the approach taken by the German government and its authorities," Hereditary Prince Alois von und zu Liechtenstein stated at a press conference in Vaduz. Liechtenstein calls for respect as a sovereign State.
To strengthen and modernize its financial center, Liechtenstein has undertaken numerous legislative projects since its financial center came under international pressure in the year 2000. The most recent example is the revision of foundation law, which has been undergoing reform and modernization since 2001. The Government presented the draft revision to Parliament on 19 February 2008. Parliament will consider the revision for the first time in its session from 12 to 14 March. According to a statement by the Government, the total revision of foundation law will not only harmonize foundation law – which was created in 1926 – with current jurisprudence, but also will enhance legal certainty for those applying the law by providing a new systematic structure and differentiated content. The revision will strengthen the Liechtenstein foundation overall.
The total revision of foundation law is already part of the Government's implementation of the project "Futuro – Vision for the Liechtenstein financial center, taking into account the needs of the overall economy". The goal of the Futuro project is to ensure sustainable economic development by strengthening the legal framework governing traditional company structures. According to the Government, the need for the Futuro project arose against the background of the reforms initiated in the wake of the financial center crisis in 2000/2001, which allows Liechtenstein to act from a position of strength. However, in light of the substantial challenges facing the financial center in the future, Liechtenstein needs a vision that ensures sustainable growth over the long term. The vision for the financial center also aims to provide support for the elaboration or strengthening of strategies for other economic sectors. Along with the Futuro project, several initiatives already exist today to strengthen the overall business location.
Due to the accusations made by members of the German government and tax authorities, according to which large-scale tax evasion has been practiced via Liechtenstein foundations, Liechtenstein foundation law has ended up in the crosshairs of public criticism. As Deputy Prime Minister and Minister of Justice Klaus Tschütscher explained at a press conference in Vaduz, foundation law and tax evasion are two entirely different pairs of shoes. Tax evasion can be carried out via any other kind of company structure as well, not only in Liechtenstein. Tschütscher also recalled that Liechtenstein, as a member of the European Economic Area, has carried out far-reaching reforms in recent years as part of its integration into the European financial system. Compared with other EEA members, Liechtenstein has introduced "the highest level of standards within the EU".
Since the campaign against tax evasion was launched, both Prime Minister Otmar Hasler and Deputy Prime Minister Klaus Tschütscher have repeatedly referred to Liechtenstein's efforts to strengthen the financial center in recent years. The Liechtenstein Financial Intelligence Unit (FIU) was created in 2002, and the old banking supervision authority was transformed into an independent Financial Market Authority (FMA) in 2005. The total revision of the Mutual Legal Assistance Act in 2000 was followed by the Mutual Legal Assistance Treaty with the United States in 2003, the Counter-Terrorism Package, the conclusion of the Savings Tax Agreement with the EU in 2004, the revision of the Due Diligence Act and the Investment Undertakings Act, the creation of an Asset Management Act in 2005, and the introduction of a Market Abuse Act in the following year. In the same period, the 2nd EU Money Laundering Directive was implemented, followed by introduction of the European Company and the European Cooperative Society.
The positioning of the financial center envisaged by the Futuro project moves Liechtenstein's traditional strengths to center stage. According to the Government, the financial center focuses on the area of wealth management. The heart of the services offered in private wealth management continues to be the Liechtenstein foundation, thereby carrying forward the long tradition of Liechtenstein fiduciary services. The revision of foundation law aims to facilitate the protection of privacy and private autonomy in a unique way.
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