Opinion: EU Must Get Rid of Liechtenstein Loophole | Business| Economy and finance news from a German perspective | DW | 21.02.2008
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Opinion: EU Must Get Rid of Liechtenstein Loophole

Liechtenstein benefits from the European Union. In return it should finally be expected to stop undermining EU members' tax systems, writes DW's Monika Dittrich.


Liechtenstein offers plenty of opportunities for greedy tax evaders. The small Alpine state enriches itself with money that is illegally taken away from other countries. It makes the lawbreakers anonymous and protects them and their millions.

This is reprehensible. The government in Liechtenstein should be expected to dry out this sleazy swamp and adhere to European transparency laws.

When the royal house in Vaduz claims there is competition among tax systems and that they are not to blame for criminals in Germany, they may be right -- but that's only half the truth.

More than turning a blind eye

Liechtenstein aids tax criminals not only by allowing tax evasion but by provoking it. With its system of banks, foundations, trusts and deceptive laws, the principality encourages investors to funnel their money away from the tax authorities in other countries.

Tax evasion abroad is not an offense in Liechtenstein, and Vaduz does not offer legal assistance to authorities investigating such cases. Due to the excessive policy of bankers' confidentiality, tax investigators aren't given any information about the accounts of potential black sheep.

And Liechtenstein even makes a profit with the business.

Why should the EU tolerate these practices? Liechtenstein may not be a member, but it happily benefits from the bloc. Its membership in the European Single Market since 1995, for example, has helped its economy. And the small state is set to become a member of Schengen Agreement and will soon take advantage of free travel throughout the entire visa-free area.

Quid pro quo with Europe

But Europe is not a one-way street. Those who want the benefits also have to give something in return -- like cooperating with tax authorities. Brussels and the EU states finally have to put pressure on Liechtenstein and impose consequences if necessary.

It's not acceptable for the principality to hold on to its antiquated practice of bankers' confidentiality and not provide any official assistance, even in investigations against the worst tax criminals.

Europe has to eliminate the tax loophole in its midst.

Monika Dittrich is a reporter for DW-RADIO in Berlin (kjb)

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