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Liechtenstein, UK DTA In Force

Wednesday, January 2, 2013

Following the exchange of relevant notifications, the agreement pertaining to the avoidance of double taxation and tax evasion in the area of taxes on income and on wealth between Great Britain and Northern Ireland and the Principality of Liechtenstein has now entered into force.

According to the Liechtenstein government, the agreement applies to individuals resident in one or both treaty states.

The Liechtenstein government explains that the double taxation agreement (DTA) between the Principality and the UK guarantees mutual interests and meets the needs of both countries, noting that the accord will serve to promote and to secure cross-border investments between both countries. The treaty offers individuals taxable in Liechtenstein significant advantages as well as clarity vis-à-vis their tax treatment in the UK, the government adds, pointing out that these advantages also apply to legal entities, including trusts and trust companies, foundations, and investment funds.

For withholding taxes, the accord will apply from February 1, 2013. As regards income and capital gains taxes, the DTA will apply in the UK from April 6, 2013. In Liechtenstein, the provisions relating to income, profit and wealth taxes will apply from January 1.

The Liechtenstein government highlights the fact that the bilateral agreement focuses on the avoidance of double taxation in the area of taxes on income and on wealth, underscoring that both states attached great importance to concluding an accord based on the international Organization for Economic Cooperation and Development standard. At the same time, the agreement takes into account the interests of both countries and the common membership of the European Single Market, the government says.

Emphasizing that the special, close relationship between the UK and Liechtenstein is based on the tax agreements concluded back in 2009, when both countries agreed to far-reaching cooperation in tax matters within the framework of the Liechtenstein Disclosure Facility (LDF) and the Liechtenstein compliance requirements, the government explains that the LDF enables UK taxpayers to voluntarily declare their past tax liabilities relating to assets located in Liechtenstein.

Welcoming the entry into force of the DTA with the UK, Liechtenstein’s Prime Minister Klaus Tschütscher maintained that this is the right way, which promises a prosperous future, noting that clarity and stability in tax matters form in this agreement the corner points of cooperation with Great Britain.

Commenting, Director of Liechtenstein’s Office of International Financial Affairs Katje Gey emphasized that the DTA takes into consideration the concerns of market participants and complements the existing agreements with a key element. Liechtenstein is once again demonstrating that it is a reliable partner and that its industry and financial centre are connected to the world’s largest network of tax treaties, Gey ended.