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RTE Uncovers Liechtenstein Tax Evasion Scheme

Tax-news.com

22 November 1999


The Irish national broadcaster RTE has uncovered a sophisticated Liechtenstein- based tax evasion dodge apparently offered to Irish residents during the 1980s, which is similar to the Ansbacher scheme.

RTE uncovered the tax evasion plan when it obtained a copy of a secret memorandum detailing a 1984 fact finding mission to Zurich. The memorandum explains how Liechtenstein trusts could be used by Irish residents to avoid tax and also includes accounts of a number of meetings with prominent international banks and accountants consulted on the different aspects of the scheme. The memo also identifies a prominent Dublin businessman as being a party to investigating the feasibility of the scheme.

The Liechtenstein arrangement was similar to that of the Ansbacher Cayman Trust scheme from the 1980s (which is still baffling investigators), but with a greater emphasis on the protection of the identity and activities of participants, using "an opaque screen" between the depositor and his money in Liechtenstein. The scheme enabled the depositor to keep at least one step removed from the trust and his money by channelling the money via Zurich and never writing down the names of the beneficiaries of the trust (although they would be known to the trustee who would receive instructions via telephone only).

The memo identifies "the real secret" of the scheme to be that Liechtenstein law allows a Irish depositor to direct how his money is to be handled, while simultaneously claiming that he does not own the money. But it also identifies a catch, in that 'realistically speaking, these resources can never be reintroduced to Ireland and that means for all time and would affect even the freedom of descendants and he pointed out the possible danger that a descendent might well blow the gaff on the whole thing in years to come by failing to have a true understanding of the nature of the set-up'.

Irish authorities have asked RTE to hand over the memo so that they can investigate whether the scheme ever became operational and what sums of money were involved if it did. The Finance Ministry has also been urged to examine the memo in the context of current law to determine whether the loophole still exists.

RTE has published the memo on its website (www.rte.ie) with the names blacked out and is expected to hand over the full text of the memo to the Irish Revenue Commissioners soon.

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