TaxPersonal TaxOverview: Tax evaders, the movie

Overview: Tax evaders, the movie

Prospects: how will the Liechtenstein drama conclude?

Germany’s tax evasion scandal has all the hallmarks of a Hollywood
blockbuster. Secret bank accounts, spies, a mysterious informant and – of course
– the good guys chasing the bad guys.

With an Alpine set thrown in for good measure, and some high-profile
casualties, the Liechtenstein tax robbery could be on our screens sooner rather
than later.

What happened?

One can easily imagine the plot opening in Liechtenstein, a country that has
been dubbed an uncooperative tax haven by the Organisation for Economic
Cooperation for its lack of transparency and unwillingness to share banking
information.

Wealthy Germans deposit suitcases full of cash there, seemingly safe in the
knowledge their own government would never get wind of it.

Since the OECD set up its harmful tax practices project in 1998, many
countries have agreed to work with it to reduce tax evasion, but Liechtenstein
has so far refused to budge. ‘They have shown no signs of wanting to work with
us,’ said an OECD spokesman.

So Germany took the aggressive step of paying for information that could help
them recoup their unpaid taxes. Though some questions were raised about their
payment of about €4m (£3.2m) for an electronic list said to contain
incriminating evidence on over 1,000 wealthy Germans, the finance ministry said
the information was ‘definitely worth it’.

Klaus Zumwinkel was the first casualty, resigning from his post as chief
executive of Deutsche Post after it emerged he was being investigated for an
alleged s1m tax evasion.

What’s going to happen?

Political and business leaders in Germany were quick to distance themselves
from any of those under investigation, and the German public, who are already
critical of ‘fat cat’ business leaders are unlikely to sympathise with rich
people who don’t want to pay their fair share of the taxes. Tax evasion is
hurting a much greater proportion of the population than it is benefiting.

‘We believe it to be a big problem for governments. There are no official
figures because by definition tax evasion is a secretive activity, but we know
that deposits in offshore accounts run to the trillions,’ said the OECD.

The UK has now adopted Germany’s aggressive approach, paying £100,000 for the
data itself. The outcome of what has been described as Germany’s biggest tax
probe will also be keenly followed by HM Revenue & Customs and tax
authorities worldwide. And by tax evaders too, who’ll be worrying they’ll land a
starring role in this story’s sequel.

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