2008 Liechtenstein tax affair

Series of tax investigations in numerous countries thumb|Location of Liechtenstein The 2008 Liechtenstein tax affair was a series of tax investigations in numerous countries whose governments suspected that some of their citizens may have evaded tax obligations by using banks and trusts in Liechtenstein; the affair broke open with the biggest complex of investigations ever initiated for tax evasion in Germany.Skandal gigantischen Ausmaßes http://www.sueddeutsche.de/,tt2m2/wirtschaft/artikel/599/158176/ Süddeutsche Zeitung de 2008-02-15 2008-02-21 https://web.archive.org/web/20081103013551/http://www.sueddeutsche.de/%2Ctt2m2/wirtschaft/artikel/599/158176/ November 3, 2008 dead It was also seen as an attempt to put pressure on Liechtenstein, one of the few remaining uncooperative tax havens at the time, as identified by the Financial Action Task Force (FATF) on money laundering of the Paris-based Organisation for Economic Co-operation and Development, along with Andorra and Monaco, in 2007.Esterl Mike Simpson Glenn R. Glenn R. Simpson Crawford David Stolen Data Spur Tax Probes https://groups.google.com/group/alt.lawyers/browse_thread/thread/6782128a239af406/67aab034a3fcf850 Google Groups The Wall Street Journal 2008-02-19 2008-02-20 The affair prompted Liechtenstein to conduct extensive reforms to its banking and financial trust services. In 2010, the Liechtenstein government agreed to pay a 50 million euro fine to German treasury, and has since signed tax cooperation agreements with various countries.Brunhart Andreas 6 November 2018 Zumwinkel-Affäre https://historisches-lexikon.li/Zumwinkel-Aff%C3%A4re 3 June 2025 Historisches Lexikon des Fürstentums Liechtenstein de Background Millions of euros belonging to hundreds of citizens living in Germany were channelled into the LGT Bank and other banks in Liechtenstein,Keuchel Jan Andresen, Tino Nächste Woche knallt es wieder https://www.handelsblatt.com/News/Recht-Steuern/Meldungen/_pv/_p/204872/_t/ft/_b/1391899/default.aspx/naechste-woche-knallt-es-wieder.html Handelsblatt de 2008-02-16 2008-02-21 https://web.archive.org/web/20080219232712/http://www.handelsblatt.com/News/Recht-Steuern/Meldungen/_pv/_p/204872/_t/ft/_b/1391899/default.aspx/naechste-woche-knallt-es-wieder.html 2008-02-19 dead taking advantage of Liechtenstein-based trusts to evade paying taxes in Germany. According to the prosecutor's office these trusts "have been created apparently only to evade paying taxes."In Deutschland bahnt sich riesiger Steuerskandal an http://afp.google.com/article/ALeqM5ge8TKcKQFThzZG8HkM21Nc0TLKEQ Agence France Presse de 2008-02-15 2008-02-21 dead https://web.archive.org/web/20080309133948/http://afp.google.com/article/ALeqM5ge8TKcKQFThzZG8HkM21Nc0TLKEQ 2008-03-09 According to the law in Liechtenstein, such trusts allow the separation of monetary assets from their owners and are kept anonymously. In contrast to trusts of most other countries, Liechtenstein trusts can be revoked at any time and the assets will be returned to the owner. Furthermore, such trusts as well as their maintaining shell entities are only charged 0.1% (minimum 1,000 Swiss francs) annually.German Banks Suspected of Helping Clients Evade Taxes http://www.spiegel.de/international/business/0,1518,536777,00.html Der Spiegel 2008-02-21 2008-02-21 Liechtenstein thus is known to be a tax haven.Pfanner Eric Landler, Mark Liechtenstein defends its banks in German tax-evasion inquiry http://www.iht.com/articles/2008/02/19/business/tax.php International Herald Tribune 2008-02-19 2008-02-20 Investigations Germany According to the lead prosecuting office responsible for economic crime in Bochum,http://www.sta-bochum.nrw.de/pressmit/Presse15_2.doc Press release of the prosecuting office, Bochum de 2008-02-15 2008-02-15 DOC September 2011 which is supported by prosecuting offices in other towns as well as the criminal police, currentlyFebruary 2025 about 600 to 700 individuals are suspected in the investigations. In addition, search warrants have been issued. An official confirmation about the total number of suspects and amount of money involved has not yet been issued. According to the prosecutors, current investigations provide a "very high level of evidence." thumb|Klaus Zumwinkel was raided by police on 14 February 2008 on suspicion of using Liechtenstein banks to evade taxes. The affair became known on February 14, 2008, when a raid was conducted against Klaus Zumwinkel, the chief executive of Deutsche Post AG, under the suspicion that he evaded about €1 million (US$1.46 million) in taxes.Dougherty Carter Landler, Mark Tax Scandal in Germany Fans Complaints of Inequity https://www.nytimes.com/2008/02/18/business/worldbusiness/18tax.html The New York Times 2008-02-18 2008-02-20Moore Matt Germany expands probe of Liechtenstein tax evasion https://www.usatoday.com/money/world/2008-02-18-germany-tax-evasion_N.htm Associated Press USA Today 2008-02-18 2008-02-20 Pressured by the government, Zumwinkel resigned from his position.Liechtenstein tax scandal hits banks http://www.theaustralian.news.com.au/story/0,25197,23238389-20501,00.html Reuters The Australian 2008-02-19 2008-02-20 https://archive.today/20110811192325/http://www.theaustralian.com.au/business-old/industry-sectors/liechtenstein-tax-scandal-hits-banks/story-e6frg96f-1111115587424 11 August 2011 dead Similarly a number of other individuals have been under investigation for months, and the appearance that the well-to-do have ways and means to evade the German tax laws has caused complaints about inequality. According to a report by the Süddeutsche Zeitung, Heinrich Kieber, a bank computer technician,Kiebler's profile @ Liechtenstein's police website https://web.archive.org/web/20080317155257/http://www.landespolizei.li/News/Pressemitteilungen/tabid/850/articleType/ArticleView/articleId/263/ffentliche-Fahndung-nach-Heinrich-KIEBER.aspx March 17, 2008 sold a CD with incriminating bank information to the Bundesnachrichtendienst (BND, English: Federal Intelligence Service), which handed the material over to the tax investigation office in Wuppertal.Philip Eppelsheim Deutschland vor historischem Steuerskandal https://www.faz.net/s/RubA5A53ED802AB47C6AFC5F33A9E1AA71F/Doc~ED3D316A995614567A8DBF27E57AE8BA0~ATpl~Ecommon~Sspezial.html Frankfurter Allgemeine Zeitung de 2008-02-15 2008-02-24 Kieber was paid €4.2 million by the Federal Ministry of Finance for the data on which the investigation is based. Facing death threats, the informant was in hiding in 2008 and had asked for police protection.Friedrich Kuhn Informant im Fadenkreuz - Tippgeber von Liechtenstein muss völlig neue Identität erhalten - Fahnder rätseln über Zumwinkels Motiv http://www.live-pr.com/ddp-djn-hintergrund-informant-im-r1048182772.htm Deutscher Depeschendienst de 2008-02-17 dead https://web.archive.org/web/20080305045124/http://www.live-pr.com/ddp-djn-hintergrund-informant-im-r1048182772.htm 2008-03-05 2012-03-22 At the time, Kieber was wanted by Interpol.https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2795011/Interpol-seeks-Liechtenstein-tax-mole.html The Daily Telegraph London Interpol seeks Liechtenstein tax mole James Quinn 2008-08-19 2010-04-22 Kieber would later state that the secret services of several countries, including Germany, had provided him with a new identity and was protecting him.Ritzer U. How a Tax-Evasion Whistleblower Became One of Europe's Most Wanted https://content.time.com/time/world/article/0,8599,2086776,00.html 3 August 2011 Time 1 March 2023 1 March 2023 https://web.archive.org/web/20230301175127/https://content.time.com/time/world/article/0,8599,2086776,00.html dead A number of raids were conducted in Hamburg, Munich, Frankfurt and other cities. Several banks were searched including Bankhaus Metzler, the Hauck & Aufhäuser bank, Dresdner Bank, UBS in Munich and the Berenberg Bank in Hamburg.Fahnder durchsuchen erneut Banken in München und Hamburg http://www.spiegel.de/wirtschaft/0,1518,536284,00.html Spiegel Online de 2008-02-19 2008-02-24 In the meantime revenue offices also noted a higher number of voluntary self-incriminations - this will avoid or reduce punitive damages - for possible tax evasions by people with financial assets in Liechtenstein.Jens Tartler Ehrlich, Peter Lockhart, Ina Lambrecht, Matthias Razzia bei deutschen Privatbanken http://www.ftd.de/politik/:Razzia%20Privatbanken/319075.html Financial Times Deutschland de 2008-02-19 2008-02-24 https://web.archive.org/web/20080223062408/http://www.ftd.de/politik/:Razzia%20Privatbanken/319075.html 2008-02-23 dead While the BND received the data in 2006, the LGT Group indicated that in 2002 secret information had been stolen but the informant had been caught and tried in 2003, and all material had been returned. United States The informant also had sold data to the government of the United States. After the affair broke open, Senator Carl Levin, chairman of a senate investigations committee, indicated his intention to probe to what degree American citizens had used the LGT bank to evade taxes.http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200802211720DOWJONESDJONLINE001112_univ.xml Sen Levin Concerned Liechtenstein Bank Drawing Tax Evaders AFP Morningstar 2008-02-21 2008-02-23 December 2024 InternetArchiveBot yes In July 2008 the U.S. Subcommittee determined that the offshore tax haven deprived $100 billion per year from the U.S. taxpayer. Specifically mentioned were Switzerland's UBS AG and Liechtenstein's LGT Group. The report indicates that the LGT Group contributed to a "culture of secrecy and deception". According to the report UBS holds 1,000 declared accounts versus 19,000 that are not declared to the IRS. The report recommended a number of steps including tighter regulations for financial institutions.https://www.cnbc.com//id/25713850 Associated Press USB, Liechtenstein Aided US Tax Cheats: Senate 2008-07-17 Finland According to the LGT Bank some 20 Finns had evaded tax in Finland via accounts containing €50-60 million in deposited funds. This was the largest known tax avoidance case in Finland. Most names are secret.Kaikkien aikojen veronkiertotutkinta kuivui kokoon - varoja piilottaneet suomalaiset jäävät ilman rikosseuraamuksia yle 18.9.2013Supreme Court ruling hobbles Liechtenstein tax probe Yle 19.9.2013 According to Helsingin Sanomat in Sept/Oct 2013 Lichtenstein tax havens accounts include funds of Casimir Ehrnrooth (see UPM, YIT, Jaakko Pöyry and Guggenheim Helsinki Plan) Bertel Paulig (coffee, spices) and a construction company owners in Turku.Bertel Pauligilla veroparatiisitili 9.10.2013 A9 Seventeen Finns paid additional taxes totalling €10 million. The taxpayers initiated actions in the Administrative Court. The decisions are not public. According to Finnish law the cost of hidden taxes can be up to 30%. In two cases shown for the reporters the Administrative Court acted 1% interest rate payment. In one case hidden funds were in total €483,000 and acted additional tax was €4,350. In addition to this, tax payers must pay the avoided taxes and an interest of the tax funds not paid in time. According to the Supreme Administrative Court of Finland no other legal procedures are possible, than collecting the hidden tax and its 1% interest rate.Liechtensteinin veronkiertojutussa on määrätty hyvin pieniä veronkorotuksia yle 16.12.2013 Other countries On February 24, 2008, it became apparent that secret bank information had also been sold to the British tax authorities and that about 100 individuals in the UK are at risk for investigations for tax evasion.http://business.timesonline.co.uk/tol/business/money/tax/article3423428.ece https://web.archive.org/web/20080706174846/http://business.timesonline.co.uk/tol/business/money/tax/article3423428.ece dead July 6, 2008 Revenue men prise open princely tax haven, Liechtenstein Watts Robert Matthew Campbell Nicola Smith The Sunday Times (Timesonline) 2008-02-24 2008-02-24 London The informant also provided the governments of Australia, Canada and France with data.http://www.spiegel.de/wirtschaft/0,1518,537742,00.html Deutschland verschenkt Steuersünder-Daten an Regierungen in aller Welt Der Spiegel 2008-02-26 2008-02-26 On February 26 it became known that the German government was willing to share relevant data of the about 4,500 accounts with other governments; two-thirds of these accounts belong to accounts of non-German individuals or entities. Fiscal authorities in Ireland,https://www.ft.com/content/ea80a8c2-e57e-11dc-9334-0000779fd2ac Monaco vows to help German tax probe The Financial Times (ft.com) 2008-02-24 2008-03-05 Denmark,https://www.berlingske.dk/privatoekonomi/skat-lun-paa-omstridt-liechtenstein-papir Skat lun på omstridt Liechtenstein-papir Berlingske 2008-02-20 2020-09-26 Belgium, Finland, Greece, Italy, the Netherlands, Norway and Sweden indicated interest.http://www.spiegel.de/wirtschaft/0,1518,538014,00.html Affäre Liechtenstein. Steuerskandal erfasst Europa und die USA. Der Spiegel 2008-02-26 2008-02-26 The governments of the Czech Republic and Spain have also announced investigations derived from Germany's list. India, however, has thus far not considered Germany's offer despite reports that many wealthy Indian citizens might have accounts in the bank.http://articles.timesofindia.indiatimes.com/2008-05-21/india/27759099_1_black-money-transparency-international-tax-authorities https://web.archive.org/web/20121021013226/http://articles.timesofindia.indiatimes.com/2008-05-21/india/27759099_1_black-money-transparency-international-tax-authorities dead 2012-10-21 Germany offers black money data, India dithers 2008-05-21 2008-05-21 Vishwa The Times of India Mohan In February 2008, The Wall Street Journal reported that the informant likely was living in Australia. In 2011, Time confirmed that he had been living in the country until 2010-2011, being under the protection of the secret services of several countries. After being found by journalists in Australia, he moved to a new unknown location. Aftermath Early reactions Liechtenstein was directly affected by the affair as the LGT Bank is owned by the reigning House of Liechtenstein. Liechtensteins Ruf ist ruiniert https://www.welt.de/finanzen/article1678860/Liechtensteins_Ruf_ist_ruiniert.html Die Welt Online de 2008-02-15 2008-02-24 The affair overshadowed the previously planned visit of Otmar Hasler, the Prime Minister of Liechtenstein, to Berlin on February 19, 2008, to meet with the Minister of Finance, Peer Steinbrück, and the Chancellor, Angela Merkel.Regierungschef Otmar Hasler bei Bundeskanzlerin Angela Merkel 2008-02-15 http://www.presseportal.ch/de/pm/100000148/100554858/presse_informationsamt_des_fuerstentums_liechtenstein de https://web.archive.org/web/20080305011924/http://www.presseportal.ch/de/pm/100000148/100554858/presse_informationsamt_des_fuerstentums_liechtenstein 2008-03-05 dead Merkel asked for help in the investigation and cooperation in prevention of tax evasion, pointing out that Liechtenstein provided the US Internal Revenue Service with some data but not the German Ministry of Finances.Eric Pfanner Landler, Mark Tax Inquiry? Principality Is Offended The New York Times 2008-02-20 The newspaper Die Welt described the event as a "government crisis". Tausende Verdächtige in Steueraffäre https://www.welt.de/wirtschaft/article1677623/Tausende_Verdaechtige_in_Steueraffaere.html Die Welt Online de 2008-02-15 2008-02-24 Alois, Hereditary Prince of Liechtenstein, called the investigations an "attack" on Liechtenstein by Germany and considered legal remedies. The German government was criticized for working with secret bank data that was stolen by the informant. The head prosecutor of Liechtenstein Robert Wallner initiated an indictment "against unknown perpetrators for the violation of company secrets for a foreign country".Head Prosecutor of Liechtenstein initiates indictment "against unknown perpetrators" http://live.radio.li/archiv/radiol-2008-02-18_1230.mp3 MP3 Radio-Liechtenstein 2008-02-24 September 2011 Also, two lawyers in Berlin initiated lawsuits against the BND and the Federal government claiming among others "infidelity toward the taxpayer" and "spying of data".Strafanzeige gegen BND und Bundesregierung http://www.netzeitung.de/politik/deutschland/907177.html Netzeitung de 2008-02-19 2008-02-24 2008-02-21 https://web.archive.org/web/20080221141802/http://www.netzeitung.de/politik/deutschland/907177.html dead The German government, on the other hand, considered a coordinated international action: according to internal sources of the Ministry of Finances it stated that Liechtenstein supposedly lives to "a good part from the business of evading taxes".Berlin will Geschäfte mit Liechtenstein radikal einschränken http://www.spiegel.de/wirtschaft/0,1518,536415,00.html Spiegel Online de 2008-02-19 2008-02-24 The government may consider a number of possible actions: Liechtenstein is about to join the Schengen Agreement which would eliminate its border controls towards Austria, and Germany's consent is required; Germany could impose fees on transfers of currency, place taxes on business activities of its citizens in Liechtenstein, and require them to prove that their activities there are legitimate. Furthermore, it counts on the support of other governments who also feel the sting of tax evasion.https://www.nytimes.com/2008/02/21/business/worldbusiness/21tax.html?ex=1361250000&en=ea5a64a160364fb7&ei=5088&partner=rssnyt&emc=rss Germany Prods Liechtenstein to Fight Fraud Dougherty Carter Landler, Mark The New York Times 2008-02-21 2008-02-22 Questions were also raised within Germany as to the internal legality of the matter. Concerns were voiced that the actions taken by BND were outside the agency's national security (and constitutional) remit, with attention also focusing on the wider ethical debate as to whether BND was justified in paying a €4m bribe to a bank official in a foreign country (with financing and approval from both the German chancellery and finance ministry).Not so fine in Liechtenstein http://www.economist.com/agenda/displaystory.cfm?story_id=10750259 The Economist 2008-02-22 2008-06-03 In March 2009 Germany announced that it will not grant judicial assistance to Liechtenstein in the prosecution of the assumed perpetrator, claiming Ordre public overrides its duty to do so under the European Mutual Legal Assistance Agreement.Fall Heinrich Kieber: Deutschland lehnt Rechtshilfegesuch ab http://www.vaterland.li/page/newsticker/eigene.cfm?id=3242&zeitraum=30 Liechtensteiner Vaterland 2009-03-23 2009-04-16 https://archive.today/20240524093642/https://www.webcitation.org/5h7IMZWgT?url=http://www.vaterland.li/page/newsticker/eigene.cfm%3Fid=3242&zeitraum=30 2024-05-24 dead Tax treaties and financial reform thumb|Alois, Hereditary Prince of Liechtenstein, Otmar Hasler, and Klaus Tschütscher present the "Liechtenstein declaration" on 12 March 2009. On 12 March 2009, Otmar Hasler, Alois, Hereditary Prince of Liechtenstein, and then prime minister-elect Klaus Tschütscher presented the "Liechtenstein declaration", which pledged to commit the country to OECD's standards of transparency and information exchange regarding taxation. As such, extensive reforms were undertaken to its banking and financial trust services. In 2010, the Liechtenstein government agreed to pay a 50 million euro fine to German treasury, thus legally ending the affair. This policy was continued under the government of Adrian Hasler.24 June 2021 Hasler, Adrian https://historisches-lexikon.li/Hasler,_Adrian 10 January 2023 Historisches Lexikon des Fürstentums Liechtenstein Liechtenstein entered negotiations with a number of countries to discuss tax avoidance issues. It reached an agreement with the United Kingdom in 2009 that will allow the about 5,000 British customers of Liechtenstein's banks that hold for them about £2-3 billion in secret accounts to come clear with British tax authorities under terms of a significantly reduced penalty.Simonian H Liechtenstein in talks with Germany on transparency Financial Times August 12, 2009 The agreement opened up Liechtenstein's banks to greater transparency, but remains controversial in Liechtenstein; some banks feared that clients would just move their money elsewhere. As of 2018, Liechtenstein has signed a total of 77 bilateral and multilateral agreements regarding taxation transparency with numerous countries. The affair was credited in temporarily damaging the Liechtenstein economy, which had already been negatively effected by the 2008 financial crisis. The affair also saw the share prices of LGT group and the National Bank of Liechtenstein drop temporarily. See also Corruption in Liechtenstein 1999–2001 Liechtenstein financial crisis References 2 External links "Tax Me If You Can", Australian Broadcast Commission TV, Four Corners page including streaming video, reporter Liz Jackson, first broadcast on 6 October 2008. Liechtenstein tax affair Tax affair Category:Economic history of Liechtenstein Category:Tax avoidance Category:Financial scandals Category:Germany–Liechtenstein relations Category:Premiership of Otmar Hasler