EU Parliament Endorses Deal to Crack Down on Bank Secrecy in Liechtenstein

A Major Step Towards Transparency and Cooperation

The European Union’s parliament has given its seal of approval to a deal with the tiny Alpine principality of Liechtenstein, aimed at curbing bank secrecy and preventing financial crime. The agreement, which was endorsed by 561 votes to 49, with 30 abstentions, marks a significant step towards transparency and cooperation between the two entities.

Key Provisions of the Deal

• Automatic Exchange of Information: Starting in 2018, tax administrations in both the EU and Liechtenstein will be able to automatically exchange information on bank accounts of each other’s residents.
• Improved Tax Enforcement: The agreement enables tax authorities to identify taxpayers correctly, administer and enforce tax laws in cross-border situations, assess the likelihood of tax evasion, and avoid unnecessary investigations.
• OECD Compliance: The deal meets the OECD’s global standard on automatic exchange of financial account information, introduced in 2014.

Benefits of the Agreement

The agreement is set to come into force on January 1, 2016. With this development, EU citizens with bank accounts in Liechtenstein will no longer be able to enjoy the same level of secrecy as they once did, making it easier for tax authorities to track down tax evaders.

Enhanced Transparency and Cooperation

As part of the agreement, information on account balances and proceeds from financial assets will also be exchanged, in addition to income such as interest and dividends. This move is expected to boost transparency and cooperation between the EU and Liechtenstein, making it more difficult for those seeking to hide their wealth to do so undetected.