The German Government has disclosed that it has been offered information by an anonymous informant regarding numerous German nationals allegedly holding undisclosed wealth in Swiss bank accounts. In a statement made on February 1st German Chancellor Angela Merkel stated that the Government should do everything within its power to obtain this data, on the condition that it is proven relevant to its fight on tax evasion. The stance has set Germany at heads with Switzerland, whose Government issued a counter statement saying that the move would constitute a breach of good faith between the nations and a gross violation of client confidentiality. Further, it has been made clear by the Swiss Government that it will not provide any administrative support if Germany proceeds with the decision.

Wolfgang Schäuble, Finance Minister of Germany, has declared that his department wishes to proceed with the acquisition, though he has displayed much greater levels of caution. In a statement on the same day he disclosed that the informant would be paid €2.5 million for the information, as long as the deal could proceed without breaching any legal statutes.

Statements by the German Finance Minister indicated that the Government believes to hold a legal precedent under which it could pursue the data purchase, following several international court’s decisions to uphold a similar purchase of stolen information regarding Liechtenstein bank accounts by the German Government in 2007.

Photo by cgommel

A total of €2,234.88 million was granted in state aid across the three surveyed countries in 2008, indicating an overall increase in grants across the countries. 98.9 percent of this amount was accounted for by aid granted by the Norwegian government.

The report shows that the primary contributions to the 2008 state aid increase were Norway’s tax relief schemes to the maritime sector and compensation to Norwegian farmers for pollution reductions. Lichtenstein increased state aid by 29 percent in 2008, all through funding of cultural and heritage projects. Between the three surveyed countries only Iceland decreased state aid in 2008, lowering their grants by 32.3% compared to 2007.

Norway provided 0.54 percent of it’s GDP in governments grants, compared to Iceland’s 0.13 percent and Liechtenstein’s 0.03 percent. The EU average for the same period was 0.42 percent of GDP. However, if crisis package aid is included in the statistics, then the level of aid granted in Norway is only a quarter of that is average for the countries of EU.

The European Free Trade Association is an intergovernmental organization set up for the promotion of free trade and economic integration to the benefit of its four member states: Iceland, Liechtenstein, Norway and Switzerland.

Photo by NHD-INFO

It was reveled on November 11th by Klaus Tschütscher, Liechtenstein Prime Minister, that the nation will be considered as adequately complying with the G20′s and OECD’s efforts to combat international tax evasion. By signing Tax Information Exchange Agreements (TIEA) with Belgium and Netherlands, Liechtenstein has brought their total agreement number to the required minimum of twelve to be judged as having substantially implemented the internationally agreed standard in exchange of fiscal information. The status change also circumvents possible sanctions or actions from G20 nations, directed at jurisdictions they deem to be uncooperative in taxation matters.

Commenting on the event, the Prime Minister said, “I think this is a good standpoint for the future, though of course it’s an intermediate step,” he continued on to say “We are working in open markets, in a globalized world, so tax evasion should be marginalized”. Klaus Tschütscher also pronounced that the removal of the country’s “grey list” status is a “milestone”. Displaying his backing to these words, Liechtenstein is already in negotiation with more countries for similar tax information agreements and has joined Global Forum in Transparency and Exchange of Information.

Angel Gurría, OECD Secretary-General, praising the country on its efforts said, “I would like to commend Liechtenstein for its swift implementation of the OECD standard on exchange of information. After its acceptance of the standard on 12 March 2009, Liechtenstein has within a few months turned into reality its commitment to fully cooperate in tax matters. I would like to congratulate Prime Minister Klaus Tschütscher for his leadership and continued efforts in this process”.

The London G20 Summit, held on the 2nd of April this year, heralded an unprecedented wave of Tax Information Exchange Agreement (TIEA). In what was described as “revolutionary” by Angel Gurría, OECD Secretary-General, the number of completed TIEAs has almost doubled since their inception in late 2000.
Since the G20 summit, and subsequent global push for greater tax transparency and compliance, the following 53 agreements have been signed.

United States – Monaco (8 September 2009)
Denmark – Turks & Caicos Islands (7 September 2009)
Netherlands – Antigua & Barbuda (2 September 2009)
Denmark – Gibraltar (2 September 2009)
Denmark – Anguilla (2 September 2009)
Germany – Liechtenstein (2 September 2009)
Netherlands – St Vincent & the Grenadines (1 September 2009)
Denmark – St Vincent & Grenadines (1 September 2009)
Denmark – St Kitts & Nevis (1 September 2009)
Netherlands – St Kitts & Nevis (1 September 2009)
Canada – Netherlands Antilles (29 August 2009)
United Kingdom – Gibraltar (27 August 2009)
Australia – Gibraltar (25 August 2009)
New Zealand – British Virgin Islands (14 August 2009)
New Zealand – Cayman Islands (14 August 2009)
New Zealand – Gibraltar (13 August 2009)
Germany – Gibraltar (13 August 2009)
United Kingdom – Liechtenstein (11 August 2009)
Monaco – San Marino (29 July 2009)
Bermuda – Ireland (28 July 2009)
New Zealand – Isle of Man (27 July 2009)
New Zealand – Jersey (27 July 2009)
United Kingdom – Turks & Caicos (23 July 2009)
Netherlands – Turks & Caicos (22 July 2009)
Netherlands – Anguilla (22 July 2009)
Ireland – Turks & Caicos (22 July 2009)
Ireland – Anguilla (22 July 2009)
New Zealand – Guernsey (21 July 2009)
UK – Anguilla (20 July 2009)
Belgium – Monaco (15 July 2009)
New Zealand – Cook Islands (9 July 2009)
Netherlands – Cayman Islands (8 July 2009)
Germany – Bermuda (3 July 2009)
Ireland – Gibraltar (24 June 2009)
Ireland – Cayman Islands (23 June 2009)
France – British Virgin Islands (17 June 09)
Australia – Jersey (10 June 2009)
The Netherlands – Bermuda (8 June 2009)
Denmark – British Virgin Islands (19 May 2009)
Faroes – British Virgin Islands (19 May 2009)
Finland – British Virgin Islands (19 May 2009)
Greenland – British Virgin Islands (19 May 2009)
Iceland – British Virgin Islands (19 May 2009)
Norway – British Virgin Islands (19 May 2009)
Sweden – British Virgin Islands (19 May 2009)
New Zealand – Bermuda (17 April 2009)
Denmark – Bermuda (16 April 2009)
Faroes – Bermuda (16 April 2009)
Finland – Bermuda (16 April 2009)
Greenland – Bermuda (16 April 2009)
Iceland – Bermuda (16 April 2009)
Norway – Bermuda (16 April 2009)
Sweden – Bermuda (16 April 2009)

Previous to these, 63 agreements had been signed, bringing the total at the 10th of September to 116.

The Tax Information Exchange Agreement (TIEA) between the United Kingdom and Liechtenstein, which was signed on the 11th of August, has an inherently new TIEA feature which sets down provisions for voluntary tax information disclosure, and a corresponding leniency program on the part of the British HM Revenue & Customs (HMRC).

The TIEA allows British account holders five years, starting in 2010, to volunteer up evidence proving that they are in communication with the HMRC, and that appropriate action has been taken in regards to their tax status. If within those five years the account holder provides no such evidence, the account holding bank may forcibly close the account or instruct the holder to move its contents to a different principalities’ banks. Penalties could also be issued by the bank, although there is no legislation within Liechtenstein law which details the exact amounts. Further, it has been made adamantly clear that Liechtenstein will not at any point be forced to divulge the the account holder’s name to the UK government.

On the British side, those found to be evading their taxation liability with a Liechtenstein offshore account, and volunteering that information up through the leniency program will face a penalty of only 10% for their total taxation owed. According to the HMRC, there could be as many as 5,000 British account holders in Liechtenstein, their combined unpaid tax value is estimated to be near £3 billion.