Liechtenstein, Germany to sign deal on tax evasion

Liechtenstein has agreed to provide Germany with information on suspected tax evaders starting next year, officials said Monday.

The deal, to be signed Wednesday in Vaduz, ends a long-running dispute between Liechtenstein and its powerful northern neighbor, which has accused the tiny Alpine principality of providing Germans with a safe haven to hide their fortunes from the tax man.

"It's an agreement based on OECD standards, meaning upon request and on an individual basis," Liechtenstein government spokesman Max Hohenberg said. The 30-nation Organization for Economic Cooperation and Development has been leading efforts by powerful countries such as the United States, France and Germany to crack down on tax havens.

The new accord means Berlin will be able to demand details on German citizens suspected of tax evasion in Liechtenstein, which until now has blocked such requests on the grounds that it doesn't consider tax evasion a criminal offense. The agreement comes into force in 2010, meaning Liechtenstein won't provide information on suspected tax evasion before then.

A German Finance Ministry spokesman declined to comment on the details of the accord before it is signed.

The agreement is similar to one signed between Liechtenstein and the U.S., but less extensive than one recently agreed with Britain. That deal required Liechtenstein to compel its banks and brokers to seek assurances from British customers that they have disclosed their Liechtenstein assets to tax authorities in London.

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German authorities believe thousands of their citizens have for decades used Liechtenstein's strict banking secrecy laws — comparable to those in next-door Switzerland — to duck taxes.

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Last year, German authorities paid a former employee of Liechtenstein's LGT bank for the names of about 1,400 alleged tax cheats on its customer rolls. The bank is wholly owned by Liechtenstein's ruling prince and his family.

The LGT affair, along with the threat of economic sanctions mooted by Germany and France against tax havens, prompted Liechtenstein to agree earlier this year to reform its banking rules and sign tax information exchange agreements.