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
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".