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Europe

Liechtenstein to Cooperate with US Over Tax Fraud

The tax haven will sign a deal with the United States to drop bank secrecy in alleged cases of tax evasion by US clients at Liechtenstein banks. But the principality vows it won’t give up its bank secrecy altogether.

Two of Liechtenstein's popular symbols: its emblem and a briefcase full of cash

American tax evaders might think twice about bringing their money to Liechtenstein

The two-year bilateral accord is scheduled to be signed on Monday, Dec. 8, said government spokesman Max Hohenberg. In the past, both countries had to agree that fraud had occurred before a prosecution could be launched, he said.

"From now on, fraud only needs to be recognized by US law," Hohenberg explained.

In the past, the US has also had to prove a deliberate tax fraud, a high standard that means Liechtenstein bank accounts have been essentially impenetrable to outsiders.

But although the principality is under constant international pressure to revisit its secrecy laws and anonymous foundations, "it would be false to say we have given up banking secrecy," Hohenberg emphasized.

Prince Nikolaus, a member of Liechtenstein ruling royal family who brokered the deal, stated that while he was willing to grant similar concessions within the European Union, he requires double-taxation agreements and a commitment by countries to deal leniently with citizens that had hidden money from tax authorities in Liechtenstein.

Cooperation essential

"We accept that more cooperation is necessary because there is more acute pressure," he said. "It is of high political importance to many countries. Money is a rare species for states -- they need every penny."

Along with Monaco and Andorra, Liechtenstein has been blacklisted by the Organization for Economic Cooperation and Development. The principality grabbed front page headlines in European newspapers earlier this year after Germany launched a massive tax evasion probe of its citizens hiding assets in Liechtenstein banks.

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