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Liechtenstein, Austria Conclude Tax Treaty Talks

by Ulrika Lomas, Tax-News.com, Brussels

28 January 2013


Liechtenstein and Austria have recently concluded negotiations on a bilateral withholding tax accord as well as on a revision of the existing double taxation agreement (DTA) between the between the two countries.

Liechtenstein’s Prime Minister Klaus Tschütscher and Austria’s Finance Minister Maria Fekter intend to sign the treaties on January 29 in Vaduz.

Based on the accord between Austria and Switzerland, which entered into force on January 1, the withholding tax agreement between Liechtenstein and Austria provides for the taxation of assets held by Austrians in Liechtenstein banks as well as for the taxation of assets managed worldwide by wealth structures in Liechtenstein, notably foundations.

Liechtenstein banks and asset managers, such as trustees, will levy a withholding tax on past assets and will tax future investment income, payments to non-transparent foundations and payments from non-transparent foundations to beneficiaries.

The revised DTA between Liechtenstein and Austria provides for the mutual exchange of tax information in accordance with the international standard as well as for enforcement assistance. In addition, the withholding taxes on dividends and interest have been adjusted.

Welcoming the successful conclusion of negotiations, Liechtenstein’s Prime Minister Klaus Tschütscher explained that both treaties will serve to place cooperation between Austria and Liechtenstein in the area of taxation on a "stable and clear basis", thereby ensuring legal certainty for Austrian clients. The agreements also demonstrate Liechtenstein’s irrevocable commitment to the Organization for Economic Cooperation and Development’s (OECD) regulations, the minister added.

Alluding to the Principality’s March 2009 Declaration, Prime Minister Tschütscher stressed that this shows Liechtenstein's intention to implement the international OECD standard on information exchange in tax matters and highlights the country’s determination to find a solution for the past together with clear regulations on tax compliance for the future. Back in 2010, Liechtenstein set its "Agenda 2020" and new financial centre strategy, in which there is no place for either money laundering or tax evasion, he emphasized.

Director of Liechtenstein’s Office of International Financial Affairs Katje Gey pointed out that the tax deal with Austria will resolve the past by regularizing any hitherto untaxed assets and will provide for the taxation of future income, encompassing not only bank accounts but also foundations and other wealth structures, determining clear criteria for the future taxation of transparent and non-transparent wealth structures.

Underlining the fact that this is "a good solution, for the past and for the future," Austria’s Finance Minister Fekter emphasized that tax flight "is becoming increasingly unattractive, as this agreement makes another significant reduction in incentives."

Details of the withholding tax agreement between Liechtenstein and Austria are to be published following the signing.

TAGS: compliance | Finance | tax | investment | double tax agreement (DTA) | tax compliance | tax avoidance | mining | interest | Organisation for Economic Co-operation and Development (OECD) | Liechtenstein | enforcement | agreements | withholding tax | Austria | Switzerland | dividends | standards | regulation

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