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Two ground breaking tax agreements between the Government of Liechtenstein and the UK have been signed, which will result in off shore investments in Liechtenstein made by UK residents being properly taxed and represent the commitment of Liechtenstein to increased tax transparency.

A new Tax Information Exchange Agreement (TIEA) will enable the UK and Liechtenstein to exchange information to ensure the right tax is paid in each country in future. 

A tax disclosure programme will clear up the tax arrears of UK residents with investments in Liechtenstein and put things right for the future. It will allow penalties on unpaid tax to be capped at 10% of tax evaded over the last ten years providing the taxpayer tells HMRC everything. Those who fail to make a full disclosure by the end of the programme will find their accounts in Liechtenstein closed down.

Together the TIEA and the disclosure programme provide a unique structure designed to tackle past and future tax liabilities for UK clients of Liechtenstein financial services.

Rt Hon Stephen Timms MP, Financial Secretary to the Treasury, welcomed the agreements:

“Today’s agreements are very good news for honest taxpayers and investors everywhere.  And they represent a big step forward for tax transparency.

I am grateful to the Government of Liechtenstein for their goodwill, determination and professionalism to find an effective way forward in a difficult and complex area.

HMRC and Liechtenstein Government officials have worked extremely hard to arrive at these ground breaking agreements which mean that investors can in future take advantage of the skills and experience of Liechtenstein’s investment and banking services.”

Dave Hartnett, HMRC Permanent Secretary for Tax said:

“Those who have been evading UK tax on assets held in Liechtenstein banks must now settle with us. There are no alternatives.

To resolve this as quickly as possible we will cap penalties on unpaid tax for those coming forward to make a full disclosure. Those who make the mistake of ignoring the Liechtenstein Disclosure Facility will have their accounts in Liechtenstein closed and face penalties of up to 100% when HMRC catches up with them.”