Austrian banking secrecy laws under fire after German tax scandal

20th February 2008, Comments 0 comments

The OECD steps up pressure on the country to improve transparency.

Vienna -- Austria's strict banking secrecy laws came under fire Wednesday in the wake of the tax evasion scandal currently engulfing Germany and Liechtenstein.

The Organization for Economic Co-operation and Development (OECD) stepped up its pressure on Austria in demanding improvements in the country's tax policy.

Austria, together with Switzerland and Luxembourg, was put on an OECD list of countries failing to meet international standards in investigating tax-related offences.

Deputy OECD director Grace Perez-Navarro was quoted in the Austrian daily Der Standard as saying that the Liechtenstein affair was "very helpful" in highlighting the existing problems.

Austria's banking secrecy laws are regarded as among the strictest in Europe, protecting the anonymity of investors against the authorities. A court order in the case of criminal or tax law proceedings is necessary to lift the anonymity.

The scandal was triggered by a German inquiry last Thursday with a dawn raid on the home of prominent business executive Klaus Zumwinkel, chief of Deutsche Post for the past 18 years, who subsequently resigned.

Prosecutors claim Zumwinkel avoided 1 million euros (1.5 million dollars) in personal tax by creating a revocable trust for his money in Liechtenstein.

German police swooped on the homes of wealthy Germans again on Monday, using a list of tax evaders bought for millions of euros by German spies from an informer in Liechtenstein.

Upwards of 1,000 people named in the list had moved their money to tiny Liechtenstein, a country with about 35,000 inhabitants and income taxes as low as 3 percent. Liechtenstein said it was irritated by the way German authorities had gained their information.

So far, there has been no investigation of Austrian banks in Liechtenstein. Five of the 15 banks organized in Liechtenstein's banking association are either owned or co-owned by Austrian banks.

DPA with Expatica

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