Liechtenstein, Austria Eye Swift Conclusion Of Tax Deal
Wednesday, December 12, 2012
Negotiations between Liechtenstein and Austria on a tax deal aimed at resolving
the issue of Austrian citizens' undeclared bank accounts in the Principality are
said to be in full swing.
Despite a slow start, agreement on a treaty is expected by the end of January
Reports indicate that the bilateral tax accord between Austria and Liechtenstein
will be based on a deal similar to that concluded between Austria and Switzerland earlier
in the year.
Signed in April and due to enter into force from January 1, 2013, the Swiss-Austrian
tax deal provides for a withholding tax to be levied on undisclosed assets held
by Austrian residents in Swiss banks to regularize the accounts. The agreement
also contains plans to impose an annual withholding tax on future investment
Unlike the treaty brokered with Switzerland, the accord being negotiated with
Liechtenstein is expected to encompass undeclared assets held in both foundations
and trusts in Liechtenstein. There are believed to be as many as 6,000 Austrians
with assets in foundations in the Principality, and in many cases this money
Time is of the essence for both parties. Upcoming elections are due to take
place in Liechtenstein in February next year and there are growing concerns
in Austria that Austrian citizens with undeclared and untaxed wealth in Switzerland
will simply relocate their wealth to Liechtenstein ahead of the entry into force
date of the Swiss tax treaty.
Back in April, Director of Liechtenstein’s Office of International Financial
Affairs Katje Gey made known that the aim of any future talks would be to totally
revise the existing double taxation agreement between the two countries, as
well as to resolve the issue of how to legalize untaxed assets retrospectively
and to tax the future income of Austrian residents with wealth deposited in
Gey said at the time that one solution to legalize wealth managed in foundations
could be to impose a withholding tax on income earned, at the same rate as Austria’s
capital gains tax.