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Liechtenstein pledges cooperation on tax evasion
by Emma Thomasson

Reuters    Translate This Article
15 August 2008

ZURICH, Aug 15 (Reuters) - Liechtenstein said on Friday its banks will do more to cooperate with other states after a German scandal over tax dodgers who parked their cash in the tiny principality.

Prince Alois von und zu Liechtenstein, the head of the tiny Alpine state nestled between Austria and Switzerland, stopped short of giving details on the level of cooperation Liechtenstein would now offer countries such as Germany.

He said the principality would find 'sensible solutions' for existing customers when it exchanges information.

In a national day speech he said that the days were long past when the principality could rely on its renowned banking secrecy for the success of its banking business.

He said Liechtenstein needed to do more to develop its 'onshore' banking system and cooperate with other countries who seek information about their residents who invest in the state.

'We must seize the opportunity to show the world ... that the whole financial industry can be successful when we strengthen cooperation in tax questions,' he said in the speech.

Earlier this year, Germany began one of its biggest ever investigations into suspected tax dodging, forcing the resignation of one of the country's top business leaders, mail group Deutsche Post chief executive Klaus Zumwinkel.

The probe targeted 1,000 people suspected of parking money in Liechtenstein banks and involved raids on homes and offices across Germany and drew in other European countries, fuelling calls for a crackdown on tax havens.

Back then, Prince Alois defended Liechtenstein's banking secrecy rules and accused Germany of illegally acquiring secret bank data by purchasing information on suspected tax dodgers from an informant the principality views as a criminal.

On Friday, he said Liechtenstein would still be able to differentiate itself sufficiently from other financial centres by offering clients more privacy.

Following the tax evasion scandal, Germany persuaded European Union finance ministers to speed up a review of the bloc's savings tax rules. The bloc's finance ministers agreed in principle in May to amend rules used to avoid tax on savings.

Last week, German authorities said they received bank account data on more than 1,800 people that could give fresh impetus to their pursuit of tax dodgers in Liechtenstein.

Liechtenstein, a country of 35,000 residents whose economy is heavily dependent on the financial sector, is one of only three countries on the Organisation for Economic Cooperation and Development's (OECD) blacklist of uncooperative tax havens, alongside Andorra and Monaco.

It is home to private banks and scores of wealth managers who offer discreet banking services for international clients.

The German investigation led to a sharp drop in the shares of Liechtenstein's banks and a cut in the rating of LGT, a private bank owned by Prince Alois's family.

(Editing by Louise Ireland)

Copyright 2008 Reuters. Reprinted with permission from Reuters. Reuters content is the intellectual property of Reuters or its third party content providers. Any copying, republication or redistribution or Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. Reuters and the Reuters Sphere Logo are registered trademarks of the Reuters group of companies around the world. For additional information about Reuters content and services, please visit Reuters website at www.reuters.com. License # REU-4198-JJM.



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