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Liechtenstein Has Moved On, Insists Tschütscher

by Ulrika Lomas,, Brussels

05 February 2013

Liechtenstein's Prime Minister Klaus Tschütscher has recently held tax talks in Berlin with Germany's Finance Minister Wolfgang Schäuble, with the discussions focusing on the eurozone debt crisis as well as on bilateral and multilateral projects and on current challenges in the area of finance and taxation.

During the course of the meeting, Tschütscher used the occasion to once again highlight the cornerstones of the Liechtenstein financial center strategy, which have been consistently implemented.

Underlining the fact that financial centers can no longer be associated with tax evasion, Tschütscher stressed that "this business model is history." Tschütscher explained that the Liechtenstein system has for years been recognized as one that steadfastly combats financial center abuse and that also complies with the international Organization for Economic Cooperation and Development (OECD) standards on transparency and tax cooperation.

As regards securities and banking supervision, Liechtenstein is firmly integrated into the European system, Tschütscher emphasized.

Alluding to the stable and "excellent" bilateral relations between Germany and the Principality, Tschütscher pointed out that the signing of the bilateral double taxation agreement (DTA) between the two countries at the end of last year was a "really specific milestone" for Liechtenstein as an economic location. Collaboration with Germany is based on continuity, he added.

During separate meetings with financial and economic experts, Tschütscher referred to the specific role of the Liechtenstein economic and financial center. The Liechtenstein Declaration of March 2009 and the country's new tax law, combined with a tax agreement strategy and efforts to consistently extend the fund center while at the same time ensuring competitive and Europe-compliant regulations, all serve to make the Principality "an attractive financial location in Europe with potential," Tschütscher said.

At the end of December 2012, Liechtenstein and Germany 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 on January 1, 2013.

At the time, the Liechtenstein government announced that the double taxation agreement with Germany is a "reliable and attractive basis for mutual investments." The government highlighted 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.

Tschütscher emphasized 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 OECD'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 | law | banking | Liechtenstein | offshore | agreements | withholding tax | Germany | dividends | standards | regulation

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