Germany, Liechtenstein Edge Closer To Tax Deal

by Ulrika Lomas, Tax-News.com, Brussels

19 August 2011

Germany and the Principality of Liechtenstein recently initialled in Berlin a draft agreement, designed to avoid double taxation and tax evasion in the area of taxes on income and capital.

According to a joint statement issued by both the German finance ministry and the Liechtenstein government, the double taxation agreement (DTA) will serve to further strengthen the existing “good economic relations” between the two countries and to further develop cooperation in tax matters for mutual benefit.

In their statement, both countries emphasized, however, that provisions establishing possible procedures for the retrospective taxation of previously untaxed capital deposits held by German investors in Liechtenstein, as well those establishing possible procedures for the taxation of capital income, would not be included in the new DTA. The two countries confirmed instead that any such provisions would be the focus of future discussions pertaining to the conclusion of a separate agreement.

The initialling of the draft double taxation agreement between the two countries marks a formal end to negotiations, the statement continues, which were initiated at the conclusion of the tax information exchange agreement (TIEA) signed by both parties on September 2, 2009.

The signing of the bilateral DTA between Germany and Liechtenstein is expected to take place this year. In accordance with international practice, the text of the agreement will be published following the signing of the agreement.

Recommended