Home News Liechtenstein, Andorra and Belgium to ease banking secrecy rules

Liechtenstein, Andorra and Belgium to ease banking secrecy rules

Published on 13/03/2009

Vaduz — Bowing to international pressure, Belgium, Andorra and Liechtenstein said Thursday that they would ease strict banking secrecy rules and cooperate with foreign tax authorities.

The three countries announced separately that they would swap information with foreign governments to combat tax fraud and evasion, shedding light on the secret offshore accounts of non-residents.

In landmark announcements, Liechtenstein and Andorra — two of the three countries on the OECD’s list of "uncooperative tax havens" — said they would seek bilateral accords to share banking information with foreign authorities in cases of tax evasion and tax fraud.

Separately, Belgian Finance Minister Didier Reynders said Belgium planned to relax its banking secrecy laws next year when it will begin exchanging savings tax information with its EU partners.

"We are aware of our responsibility as part of a globally integrated economic area," said Liechtenstein’s Prime Minister Otmar Hasler, who leaves office later this month.

The announcement came a year after a major tax evasion scandal in Germany uncovered allegedly undeclared accounts held by German taxpayers and other foreigners under the cloak of Liechtenstein’s secretive banking sector.

LGT bank, which is controlled by the royal family, claimed that German tax inspectors were working from a list with the names of 1,400 of its clients — 600 of them German — that had been stolen in 2002.

On Tuesday, LGT said it had dropped its controversial trusts and fiduciary businesses, and early Thursday the government released a statement announcing its policy shift.

"The Liechtenstein government accepts the OECD standards on transparency and information exchange in tax matters and supports the international measures against non-compliance with tax laws," the principality said.

Prime Minister-elect Klaus Tschuetscher later told journalists that talks with Germany would begin on Friday and with Britain at the beginning of April. Liechtenstein already concluded a landmark tax agreement with the United States in December, which is due to come into force on January 1, 2010.

Liechtenstein and Andorra, along with their fellow European principality of Monaco, are listed by the financial watchdogs of the Organisation of Economic Cooperation and Development as a "non-cooperative tax haven."

Monaco on Thursday declined to comment.

"The Monegasque government is not making any comment on this question," said a source close to the government.

Monaco authorities provide information about accounts held in the Mediterranean principality to investigators from countries that make such a request but do not automatically provide it to the tax authorities of foreign states.

Monaco has insisted that it wants to keep up with general international standards of banking transparency but says that transparency rules must be applied evenly to all countries and not just to some.

While not on the OECD list, Belgium — along with fellow EU members Austria and Luxembourg — does not share information on savings account holders from other European countries with the tax authorities of their respective countries.

Instead of exchanging information, Belgium applies a withholding tax on interest earned on foreign-residents’ savings accounts.

But while Belgium is prepared to lift its banking secrecy rules, Luxembourg and Austria remain determined to keep theirs despite growing international pressure.

"Banking secrecy is not the same thing as a tax haven," Luxembourg Prime Minister Jean-Claude Juncker told journalists in Prague.

"Unilaterally lifting banking secrecy will not contribute to transparency, but will only divert financial flows and prejudice the Austrian economy," Austrian finance ministry spokesman Harald Waiglein said in Vienna.

At a meeting in Luxembourg on Sunday, finance chiefs from Switzerland, Luxembourg and Austria called for their countries to be included in international talks on tax havens.

International pressure to clamp down on tax havens has been growing in recent weeks, with a summit of the Group of 20 economic powers in London on April 2 due to discuss a list of uncooperative tax havens.

The Franch and German governments have been leading efforts to clamp down on tax havens at the G20 summit, urging in a joint statement in Berlin an international "sanctions mechanism."