Liechtenstein vows to work with Europe on tax fraud

29.02.08 @ 09:30

  1. By Lucia Kubosova

Liechtenstein's prime minister Otmar Hasler has pledged to seek a "reasonable agreement" with Europe on tax and transparency issues amid mounting pressure over a massive tax fraud involving wealthy EU citizens.

"With respect to the current tax policy questions that are broadly and controversially debated in Europe, we want to play our part in finding a reasonable agreement," Mr Hasler said on Thursday (28 February), according to the AFP news agency.

He added that negotiations on the "comprehensive tax fraud agreement" applying to both Liechtenstein and EU member states are already "well advanced", and vowed to work towards their "successful conclusion".

The tax row was sparked off earlier this month after German authorities launched an investigation into illegal transfers to avoid taxes by around 600 German citizens included on a list of some 1,400 foreign clients of a Liechtenstein bank.

The province, a tax haven similar to Andorra and Monaco, of some 160 square kilometres situated between Austria and Switzerland with around 35,000 citizens, had initially declined to boost transparency in its banking system.

But it came under a strong pressure from several countries with ongoing investigations related to the German case, including the US, Canada, Australia, New Zealand, Britain, Italy, France, Sweden, Greece and Spain.

Moreover, German interior minister Wolfgang Schaueble insisted at a meeting with his EU counterparts in Brussels on Thursday that tax havens "are not compatible with European integration."

While the ministers agreed that Liechtenstein could join the Schengen border-control-free area, all member states need to ratify the deal, with Mr Scheuble hinting: "Naturally, the promise [on taxes] of Liechtenstein's head of government must be turned into action" for Berlin to give its green light.

It is not yet known when exactly the province could officially become a part of the Schengen zone, with the timetable being coordinated with Switzerland, but its joining is expected in November.

The tax row is due to be debated further next week by EU finance ministers.

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