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Liechtenstein, Austria Close To Tax Agreement

Friday, January 18, 2013

Liechtenstein’s Prime Minister Klaus Tschütscher has confirmed plans to conclude a tax package with Austria shortly.

During a recent working visit to Vienna, Tschütscher held talks with Austrian Finance Minister Maria Fekter, with the discussions focusing on negotiations on a bilateral double taxation and withholding tax agreement between the two countries.

Underlining the strong bond between the neighboring countries as well as the close economic ties between Austria and Liechtenstein, Tschütscher revealed that the road map has been set and both parties aim to sign the joint tax package soon.

According to the Liechtenstein prime minister, international tax conformity is a key framework condition of the Principality’s tax policy. While underscoring his conviction that national tax sovereignty must be maintained, Tschütscher nevertheless emphasized the importance of cross-border tax cooperation.

During the course of his meeting with Fekter, Tschütscher alluded to the cornerstones of the Liechtenstein tax policy, insisting that the country’s tax law is 100% compatible with the European Union (EU).

The bilateral tax accord between Austria and Liechtenstein, aimed at resolving the issue of Austrian citizens’ undeclared and untaxed bank accounts in the Principality, is based on a deal similar to that concluded between Austria and Switzerland, which entered into force at the beginning of the year.

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 and imposes an annual withholding tax on future investment income.

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.