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Liechtenstein, UK Seal Tax Treaty

Thursday, February 9, 2012

During a recent working visit to Vaduz by Dave Hartnett, Permanent Secretary for Tax at HM Revenue and Customs (HMRC), Liechtenstein and the UK initialled a landmark comprehensive bilateral Income Tax Treaty, and extended the unique Liechtenstein Disclosure Facility.

During the course of the visit, Katja Gey, Director of Liechtenstein's Office of International Financial Affairs, and Hartnett initialled a first-ever comprehensive convention on taxation of income and capital between Liechtenstein and the UK, based on the 2010 Organization for Economic Cooperation and Development (OECD) Model.

According to the Liechtenstein government, the agreement results from two years of talks and negotiations and evidences the long-term commitment of the parties to tax cooperation, clarity and compliance, and reflects and balances the interests and needs of both parties.

The Liechtenstein government stated: “Importantly, the treaty will encourage an increase in cross-border business between Liechtenstein and the UK, affording Liechtenstein tax residents a number of important UK tax advantages and clarity in their UK tax treatment.”

“Such benefits will also be available to qualifying Liechtenstein corporate entities, trusts, trust enterprises, foundations, establishments, and investment funds. The treaty, which will now go through formal procedures of signing and ratification, is expected to come into force from January 1, 2013.”

Commenting on the agreement, Liechtenstein Prime Minister Klaus Tschütscher emphasized that: "Once again we prove that we are a reliable partner. Our industry and our financial centre will be linked to the largest tax treaty network in the world. This treaty provides clarity and stability of tax treatment”.

In addition to concluding negotiations on the treaty, both parties agreed to an extension of the Memorandum of Understanding Relating to Cooperation in Tax Matters of August 11, 2009 (MoU), including the unique and favourable terms of the LDF for an additional year.

The government stresses that this will make voluntary disclosure of past due UK tax liabilities possible for UK taxpayers with non-UK assets who establish a meaningful connection to Liechtenstein until April 5, 2016.

Gey, who has led the efforts in Liechtenstein on the treaty and the MoU, stated that:

"We are delighted to have agreed a full tax treaty with the UK, evidencing Liechtenstein's genuine commitment to tax compliance and the UK's assistance to our work in ensuring the long term success of the Liechtenstein financial centre. The treaty will offer significant new clarity in how Liechtenstein residents are taxed when investing and doing business with the UK, and will encourage the use of Liechtenstein entities, bringing new business to both Liechtenstein and the UK."

"The extension of the favourable terms of the LDF for an additional year is of enormous value to UK taxpayers worldwide, and reflects our commitment to a win-win-win approach under which the interests of clients of Liechtenstein financial intermediaries are always, for us, at the forefront while we also seek to ensure both the development of our financial centre and the preservation of the legitimate tax collecting interests of the UK, our close partner in these arrangements. The additional year of application of the LDF will benefit all parties and, I am pleased to note, particularly UK taxpayers who maintain the requisite relationship with our financial centre."

During HMRC's visit to Liechtenstein, the Office for International Financial Affairs led meetings between HMRC and representatives and members of the Liechtenstein Association of Professional Trustees, the Liechtenstein Bankers Association and the Liechtenstein Insurance Association.

The parties also reviewed recently agreed procedures under which compliant UK clients of Liechtenstein financial intermediaries may certify their UK tax compliance, including through self-certification, ensuring that the process avoids unnecessary costs or delay.

Following the visit, Prime Minister Tschütscher stated that: “We are enabling attractive tax and financial positions through facilitated and transparent framework requirements, and will react cooperatively with professional partners to our clients' needs. It is especially clear to us, that those businesses with undeclared capital have no future".

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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