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| Liechtenstein, Austria Sign Swiss-Style Tax Deal |
| Wienna, 31.01.2013 |
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| Liechtenstein's Prime Minister Klaus Tschütscher and Austria's Finance Minister Maria Fekter have recently signed in Vaduz a withholding tax agreement together with a protocol revising the existing bilateral double taxation agreement (DTA) between Liechtenstein and Austria.
According to the Liechtenstein government, the "tax package" provides comprehensive provisions on tax cooperation, regularizing the past and ensuring cross-border tax compliance in the future.
Based on the accord between Austria and Switzerland, which entered into force on January 1, the withholding tax agreement between Liechtenstein and Austria provides for the taxation of assets held by Austrians in Liechtenstein banks as well as for the taxation of assets managed worldwide by wealth structures in Liechtenstein, notably foundations.
Liechtenstein banks and asset managers, such as trustees, will levy a withholding tax on past assets and will tax future investment income, payments to non-transparent foundations and payments from non-transparent foundations to beneficiaries.
As a general rule, the value of assets as of December 31, 2011, and December 31, 2013, is taken as the basis for calculating the amount of the one-off tax payment. The tax rate applicable to the payment is determined by reference to a formula specified in the convention, which takes various factors into consideration, notably the amount of capital assets in question, the growth of the assets and the length of time for which the investments have been held.
The minimum tax rate is 15% and the maximum rate is generally 30%, although in some exceptional cases that rate may rise to 38% (where the amounts of assets involved is high).
Tax is first collected by Liechtenstein banks and trustees, and the Liechtenstein authorities will then remit these one-time payments to the Austrian tax authorities in multiple installments. Most of those transfers will be made over the course of the second half of 2014.
Highlighting the fact that the agreement with Austria takes into account the specific framework conditions of the Principality's financial centre, the Liechtenstein government explains that the signing of the tax agreements is the result of "constructive, pragmatic, and compromise-based" cooperation, pointing out that the text creates clarity for the tax treatment of Liechtenstein wealth structures and that the taxation of foundations is in the interests of both countries.
The revised DTA signed between the two countries adjusts the taxation of dividends and provides for effective and comprehensive mutual assistance in tax matters as well as for enforcement assistance, in accordance with the Organization for Economic Cooperation and Development (OECD) standards and European regulations, placing Liechtenstein on a level playing field with other European Union and European Economic Area states.
The Liechtenstein government stresses that the bilateral tax treaties concluded with Austria, which are due to enter into force on January 1, 2014, once again demonstrate Liechtenstein's commitment to the global OECD standard on transparency and information exchange in tax matters.
Liechtenstein has already signed over 30 bilateral tax agreements, most of which are already in force. The government is determined to further extend the Principality's network of DTAs with key economic and strategic partners both within and outside of Europe.
Commenting in Vaduz, Tschütscher emphasized that the tax deals negotiated between Liechtenstein and Austria serve to create legal certainty and to build a secure bridge into the future, underscoring his conviction that while national tax sovereignty must be upheld, cross-border cooperation in tax matters is vital to make use of the opportunities of a united and open Europe.
Concluding, Tschütscher welcomed the fact that the tax accords not only take into consideration the mutual interests of both countries but also enable Austria and Liechtenstein to respond to customer needs.
For her part, Fekter said that the convention "significantly reduces the incentive to evade taxes by moving assets abroad."
She added that: "With this convention, we have achieved a huge win for Austrian taxpayers, because it creates a level playing field for Austria in the sphere of taxation. In addition, it generates additional revenues for our state budget."
by Ulrika Lomas, Tax-News.com, Brussels |
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