Liechtenstein and France have reportedly initiated talks designed to resolve the
issue of undeclared and untaxed wealth held by French citizens in bank accounts
in the Principality.
Although no formal negotiations have as yet commenced, France is said to be
eager to achieve a solution similar in nature to the agreement concluded between
Liechtenstein and the UK two years ago.
The groundbreaking disclosure agreement between Liechtenstein and the UK grants
UK taxpayers with undisclosed accounts in the Alpine jurisdiction the opportunity
to disclose income at a reduced penalty, or face having their accounts shut
down.
The so-called Liechtenstein Disclosure Facility (LDF) agreement, signed by
the two governments on August 11, 2009 along with a broader Tax and Information
Exchange Agreement (TIEA), allows penalties on unpaid tax to be capped at 10%
of tax evaded over the last 10 years providing that the account holder makes
a full disclosure to HM Revenue and Customs (HMRC). However, those who do not
make a full disclosure by the end of the program, which runs from September
1, 2009 to March 31, 2015, will find their Liechtenstein accounts closed down.
They may also face penalties on any unpaid tax of up to 100%.
At the beginning of the year, it was announced that the UK tax authority HMRC
could receive as much as GBP3bn in additional revenues over the course of the
next four years as a result of the agreement, compared to the initial projection of GBP1bn.
In the wake of the global economic crisis, countries such as Germany, and France
have been determined to clamp down on tax evasion in jurisdictions such as Switzerland
and Liechtenstein to generate much needed additional state income.
The controversial purchase by German tax authorities of stolen tax data discs
containing highly confidential banking information of individuals alleged to
have accounts held illegally in Liechtenstein and Switzerland reportedly served
to yield in the region of EUR1.8bn for the treasury.
The purchase of the tax data discs by the country’s authorities led
to a wave of voluntary disclosures throughout Germany from individuals fearing
prosecution. Although it was initially unclear as to whether or not the purchase
was legal, Germany’s Federal Constitutional Court finally permitted the
use of the tax information contained on data discs for criminal prosecutions.
The court ruled that information regarding alleged tax evaders, contained
on discs provided by informants, may indeed be used during criminal investigations,
irrespective of whether or not the original means by which the data was obtained
was deemed to be lawful.
In a bid to restore Swiss-German relations and
to calm hostile waters, discussions pertaining to the use of a withholding
tax to legalize undeclared and untaxed wealth held by German citizens in Swiss
bank accounts are due to be concluded before the summer. Indeed, both treaty
partners have referred to the negotiations as “progressing well”.
LAWANDTAX-NEWS.COM
