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Liechtenstein, Germany Seal DTA Deal

by Ulrika Lomas, Tax-News.com, Brussels

26 December 2012


Liechtenstein and Germany have recently exchanged in Vaduz ratification papers pertaining to the bilateral agreement between the two countries on the avoidance of double taxation and tax evasion with respect to taxes on income and on wealth, thereby sealing entry into force of the treaty.

According to the Liechtenstein government, the double taxation agreement (DTA) is a “reliable and attractive basis for mutual investments.” The government highlights the fact that the accord reduces in particular the withholding tax burden on cross-border participation, explaining that the DTA provides for a zero withholding tax rate to apply to certain dividends, interest and royalties flowing between Germany and Liechtenstein.

Responsible for the exchange of the ratification documents, Germany’s representative Eberhard von Schubert and Martin Frick, Director of Liechtenstein’s Office for Foreign Affairs, underscored that the DTA will serve to ensure mutual legal, planning and investment certainty. Improving tax relations will deepen and promote the already close economic relations between the two countries, the representatives stressed.

Liechtenstein’s Prime Minister Klaus Tschütscher welcomed as positive the fact that the DTA with Germany will now apply from January 1, 2013, emphasizing that Liechtenstein has built up a relationship with its main trading partner Germany characterized by friendship and by the desire for “constructive solutions.” The DTA will create legal certainty for investors, building them a safe bridge into the future, promoting further economic growth in the interests of both states, Tschütscher added.

Director of Liechtenstein’s Office of International Financial Affairs Katje Gey underlined that the Principality pledged to adhere to the Organization for Economic Cooperation and Development's standards on transparency and information exchange with its Liechtenstein Declaration of March 12, 2009. Gey said that the country has in the meantime negotiated over thirty tax treaties worldwide, becoming an “internationally recognized and credible partner.” The DTA with Germany is further evidence, and will serve as a solid basis for further international cooperation, Gey ended.

TAGS: tax | investment | double tax agreement (DTA) | interest | royalties | Organisation for Economic Co-operation and Development (OECD) | Liechtenstein | agreements | tax rates | withholding tax | Germany | dividends | standards

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