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Germany

Germany Wants Broader Tax-Haven Crackdown in Europe

Germany could limit business with Liechtenstein and include other European countries in its efforts to crack down on tax-havens, said Finance Minister Peer Steinbrueck in an interview released on Saturday, Dec. 23.

The hand of a monument reaches out towards the castle of Vaduz, Liechtenstein,

Germany has less money on hand because of tax havens such as Liechtenstein

German officials are urging Liechtenstein to increase the transparency of its financial system amid a large-scale investigation into money that well-heeled Germans allegedly stashed in the Alpine tax haven.

Peer Steinbrueck

Steinbrueck is not mincing his words when talking about tax evasion

"We aim to declare war on tax havens in Europe," Steinbrueck told the Sunday edition of the mass-circulation Bild newspaper.

The downfall of Klaus Zumwinkel -- the high-profile boss of Deutsche Post and one of the country's most prominent businessmen -- and the exposure of the foundations he and other wealthy Germans are using in Liechtenstein to hide their income has raised a furore.

The angry defence of its banking practices mounted by Prince Alois, the Alpine principality's regent, has elicited universal scorn in the German media.

"We would like to conclude a double taxation agreement with Liechtenstein," Steinbrueck was quoted as saying. "But if we do not make progress there, we must take other measures at European or German level. I am thinking of the possibility of making business dealings with Liechtenstein considerably more difficult."

German trade with Liechtenstein totalled 836 million euros ($1.24 billion) in 2006, according to Germany's Federal Statistics Office.

A wider problem

Collage of German and Liechtenstein flags

Germany could make business dealings with Liechtenstein more difficult

The problem of tax evasion, however, is not limited to the tiny principality which is sandwiched between Austria and Switzerland.

"We are also talking about Switzerland, about Luxembourg and about Austria," Steinbrueck said.

The list is, in fact, even longer. Chancellor Angela Merkel's spokesman made clear on Friday that tax evasion would be high on the agenda when Monaco's Prince Albert II visits this coming week.

German officials repeatedly cite the Organization for Economic Cooperation and Development (OECD), which characterizes Andorra, Liechtenstein and Monaco as "uncooperative" when it comes to financial transparency and unfair tax competition.

Spotlight on German private banks

hand with stamp of German tax office

Germany does not want to allow its citizens to park their cash elsewhere

Germany's Sueddeutsche Zeitung reported on Thursday, Feb. 21, that several private banks and other financial institutions in Germany helped to administer around 50 anonymous foundations for its rich clients in Liechtenstein. The newspaper did not name its sources.

The report was confirmed by Bernd Bieniossek, the leading state prosecutor in the city of Bochum who told German public broadcaster ARD's news Web site that investigators were indeed looking into the role played by German private banks.

The daily said German customers of several banks were explicitly advised about the foundations in Liechtenstein, adding that in some cases millions were transferred to accounts in Vaduz using code words.

Guenther Oettinger, premier of the western German state of Baden-Wuerttemberg, told news agency DPA that the newspaper report was plausible.

"We need to examine the allegations," Oettinger said.

One rotten apple

Merkel holding a bakset of apples

One rotten apple does not spoil the barrel, says Merkel

German Chancellor Angela Merkel, in her weekly podcast said on Saturday that people were right to be outraged about the tax evasion affair.

At the same time, however, she cautioned against attacking all successful wealth creators, including company owners and managers, calling them an essential part of the German economy.

"We should not lose sight of this in the wider discussion," she said.

Most Germans accepted their responsibility as individuals to society in general, Merkel said.

But she added: "A few still have to learn this, and the state will resort to its powers in these cases."

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