Liechtenstein International Agreements

Liechtenstein has just one double tax avoidance treaty, with neighbouring Austria. There is also a partial tax agreement in place with Switzerland, known as the Agreement with the Swiss Confederation on Various Tax Questions of 1965, which contains reciprocal agreements with a number of Swiss cantons (St. Gallen, Graubunden, Fribourg, Schaffhausen) and provides for tax-free donations for public, welfare, and charitable purposes.

International Criminal Co-operation

Liechtenstein subscribes to the European Convention on Co-operation in Criminal Matters through its own Law on International Co-operation in Criminal Matters. Foreign investigators may petition the Court for the authorities to conduct investigations; there is an appeal procedure against such a Court Order.

There are no agreements between Liechtenstein and other countries regarding fiscal matters, and the authorities reject requests for information concerning alleged tax evasion.

However, in early 2000 Liechtenstein's reputation as an offshore centre was tarnished by a number of money-laundering cases and in March 2000 the government announced a package of reform measures to tackle the problem, to include major revisions to the law covering the duty of care, changes to the penal code and the code of criminal procedure and a complete re-organisation of procedures for giving international legal assistance. In addition, the Financial Services Department has been split into two, one part dealing with the capital markets and the other with financial services. The measures were implemented from the beginning of 2001.

A Financial Intelligence Unit has also been established as an early warning system for potential abuse of the country's banking secrecy. In March 2002 the principality's Parliament unanimously approved a new law specifying the competencies and duties of the FIU, which had previously operated on the basis of a statutory instrument. The law clarifies the procedures which the body is to use in order to procure and analyse information on potential and actual money laundering activity, and confirms its position as an essential element of the amended regulatory system put in place in Liechtenstein's financial sector in the wake of OECD demands and the September 11 attacks.

The law allows the FIU to cooperate and exchange information with authorities in Liechtenstein and abroad, and provides for it to solicit assistance from foreign FIUs and other regulatory bodies.

In March 2001 Italy, Switzerland, France, Germany, Austria and Liechtensten agreed to collaborate more closely to combat money laundering activities at a meeting held in Sicily.

Ruth Metzler, Switzerland's justice and police minister said that regular meetings between the law enforcement authorities of each country were agreed upon and the ministers discussed the logistics of enhanced cross border cooperation over money laundering investigations.

In July, 2002, the United States and Liechtenstien signed a mutual legal assistance treaty designed to combat money laundering and terrorist financing. The agreement facilitates foreign investigations into tax fraud, money laundering, and other financial crimes; however simple tax evasion does not fall under the remit of the agreement, as the result of a Liechtenstein law which states that the non-payment of taxes is an administrative matter into which foreign investigators may not probe.

In September, 2002, Liechtenstein's Head of Government, Otmar Hasler also confirmed that the Principality had recently concluded an agreement with Monaco over the prevention of money laundering and terrorist financing.

The US mutual assistance treaty has been ratified by both countries, and came into force in August, 2003.