Liechtenstein deal secured with tax treaty offer

A secret condition of last week’s ‘historic’ tax deal between Liechtenstein
and the UK was a commitment from the Government to enter talks over a full
taxation treaty with the principality, Accountancy Age can reveal.

Sources close to recent developments say the undertaking was given by HMRC
permanent secretary for tax Dave Hartnett during negotiations with Prince
Nikolaus von und zu Liechtenstein. British taxpayers who do not divulge income
hidden in Liechtenstein will face closure of their bank accounts. Hartnett and
Prince Nikolaus also agreed a tax information exchange agreement. A full
taxation agreement would propel Liechtenstein from tax pariah into a club of 100
countries with whom the UK has negotiated treaties.

The move faces fierce criticism. Tax justice campaigner Richard Murphy said:
‘It provides Liechtenstein operations with privileged access to the UK economy
and that is not acceptable. It is a recipe for abuse.’

An HMRC spokesman defended the move: ‘Liechtenstein has entered into a
groundbreaking agreement with HMRC to ensure that no UK taxpayers are using it
to hide assets and income and has also signed a TIEA. We expect these agreements
will be honoured and will mark Liechtenstein’s move away from a history of tax
secrecy. On that basis, the UK is happy to start discussions with Liechtenstein
how [sic] any double taxation of cross-border investment might be relieved.’

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