Tax compliance

Tax issues are extremely important for the competitiveness of the Liechtenstein and Swiss financial centers. Liechtenstein has decided in favour of a strategy for its financial center that counts on the tax compliance of its foreign clients. With the announcement of the Liechtenstein Declaration on 12 March 2009, the Principality agreed to comply with the global OECD standard in relation to administrative assistance in tax matters. In the meantime, tax information exchange agreements (TIEA) or double taxation agreements (DTA) for cross-border administrative assistance in accordance with the OECD regulations have been concluded with 36 countries. As at 1 January 2013, 24 of these agreements had come into force, including a DTA with Germany and one with the United Kingdom. On 1 January 2014, a withholding tax agreement with Austria also came into effect. This had been signed on 29 January 2013 in Vaduz. Another important tax issue involves the US «Foreign Account Tax Compliance Act» (FATCA). Liechtenstein decided in February 2013 to apply the EU 5 pilot model as a basis for implementing the FATCA legal provisions.

The LLB Group acts as a trail-blazer in tax compliance issues in the Liechtenstein financial center. It employs a risk-based approach and, in the case of new foreign clients, if certain criteria are present, it requires them to sign a declaration confirming that their assets have been taxed. This adjustment in new client business applies globally to all locations and business areas of the LLB Group. Clients, who are participating in the «Liechtenstein Disclosure Facility» (LDF) are excluded from this procedure. This facility is a bilateral disclosure programme, valid only for the Liechtenstein financial center, which Liechtenstein agreed with the United Kingdom of Great Britain and Northern Ireland.

The regulatory framework in the taxation field is undergoing constant change. It is becoming clear that the automatic information exchange (AIE) is being established as the international standard and taxation offences will be regarded as a predicate offence to money laundering. In a proactive step, the LLB Group has developed a tax-compliance strategy. We are taking the necessary measures only to manage tax-compliant assets in future (see the chapter «Regulatory framework and developments»).

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