Liechtenstein Conference Explores Private Wealth Management And Cross-Border Tax Co-Operation

by Ulrika Lomas, Tax-News.com, Brussels

08 October 2008

The fifth Liechtenstein Dialogue, held in Vaduz, focused on the Perspectives of Private Wealth Management, exploring the most recent developments and trends - a sensitive issue given the current global economic crisis and renewed attacks on banking secrecy in Liechtenstein and Switzerland.

Attending the conference on October 2 and 3, 2008, were approximately 180 representatives from the world of finance, politics and science from Liechtenstein and abroad including Switzerland, the UK, the USA, Jersey and Guernsey, as well as high calibre speakers.

Among the key topics covered were the current challenges and future success factors in private banking, the vision of the Liechtenstein financial centre, social trends shaping the industry such as sustainability in investments, philanthropy, and ethics in wealth management and the controversy between privacy and cross-border information exchange.

Private wealth management was extolled as an attractive, international and growing business and of major importance for small financial centres such as Liechtenstein. According to Prime Minister Otmar Hasler, in order to promote this vital business, domestic reforms pertaining to tax and foundation law needed to be undertaken along with measures to secure agreements with important economic partners. Consideration to the existing legal tradition and the close client relationships in Liechtenstein must, however, be given, he argued.

Regarding the issue of banking secrecy, Hasler alluded to the recent Futuro Strategy which outlines Liechtenstein’s vision for the future, with its focus firmly on the protection of privacy and providing key incentives for private investment. Here, Hasler reiterated his firm belief that an increase in tax co-operation was possible whilst at the same time preserving banking secrecy.

Tax co-operation was imperative, he maintained, as recent success indicates. Indeed, a fraud agreement has already been formalised with the EU and a bilateral agreement with the USA regarding tax information exchange stands on the verge of completion. Moreover, Liechtenstein is also prepared to sign a Double Taxation Agreement with reasonable rules to protect the privacy issue, Hasler revealed.

Fritz Kaiser, chairman of the Kaiser Ritter Partner in Vaduz, made clear his viewpoint, staunchly defending banking secrecy and Private Wealth Management in a conference interview. According to Kaiser, the desire for privacy and self determination is a basic human need. Wealthy individuals prefer their wealth not to be made public knowledge, and consequently opt to use banking secrecy in order to protect themselves and their children from harm, for example kidnappings, or to protect their wealth from expropriation by corrupt states. Increasing transparency, according to Kaiser, will increasingly lead to individual tax conformity. Ever decreasing international privacy will give Liechtenstein a market advantage as it is able offer competitive wealth management in a stable country with a good protection of privacy and solid banking privacy.

During a panel discussion with Pierre Mirabaud, President of the Swiss Bankers Association, Christian Raubach, a partner of Wegelin and Jürg Zeltner, a member of the UBS concern, statements made in support of banking secrecy were met with applause. Mirabaud remained adamant that the tax laws were there to respect. Zeltner went further by appealing to certain member states to make their tax systems more attractive. In so doing, the problem of tax evasion would be defused. According to Zeltner, the responsibility of private wealth management had its limits. The industry should not have a general reporting duty imposed on it.

The sixth Liechtenstein Dialogue will take place on October 1 and 2, 2009.

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