Spy Saga Sparked Liechtenstein Tax Probe

International Law

Posted Feb 27, 2008, 01:30 pm CDT
By Martha Neil

Liechtenstein is a small country the size of Washington, D.C., wedged between Austria and Switzerland. But it has been big news recently as a growing number of countries focus on the bank accounts there that many noncitizens reportedly have established to avoid paying taxes at home. Meanwhile, it appears that one individual's theft of computerized data concerning 1,400 bank customers probably sparked the international investigation.

Although the microstate values the banking secrecy that provides a tax haven to some, it has responded to the growing international probe of its practices by introducing legislation that would differentiate between charitable nonprofits and those that are set up for private purposes, Bloomberg reports.

But Liechtenstein has also begun a new investigation of the man suspected of stealing the banking data that sparked a German tax-fraud investigation, according to Reuters.

"The current investigation began after German spies paid 5 million euros ($7.4 million) for a computer disk containing the details of citizens suspected of using Liechtenstein-based foundations to avoid taxes in their home countries," Bloomberg writes.

Reuters says four disks were taken from Liechtenstein's LGT bank by a former employee. They contained "some 1,400 client relations dating from before 2002," according to the news agency. Perhaps 600 of these clients were from Germany.

As discussed in an earlier ABAJournal.com post, a number of other countries also are now looking into their citizens' banking activities in Liechtenstein. Among them: U.S. authorities reportedly are looking into the activities of 100 Americans who may have avoided taxes here by depositing assets into Liechtenstein accounts.

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