* Countries agree bank secrecy deal
* Allows U.S. to chase tax dodgers in some cases
* May pressure Swiss to follow suit
By Lisa Jucca
ZURICH, Dec 8 Banking secrecy stronghold
Liechtenstein signed a landmark deal with the United States on
Monday that paves the way for the exchange of bank data with
Washington in certain cases of tax evasion.
The agreement will allow Washington to chase tax dodgers
into Liechtenstein under specific circumstances while allowing
the tiny principality's banks to continue to hold and trade U.S.
securities on behalf of their U.S. clients.
"We have again confirmed our good and long-lasting
relationship with the USA with the agreement signed today.
Through the agreement, we have also created a solid basis for
future cooperation with the newly elected US administration,"
Liechenstein Prime Minister Otmar Hasler said in a statement.
The deal may put pressure on neighbouring offshore giant
Switzerland, which still makes a distinction between tax evasion
and tax fraud, and whose largest bank, UBS UBSN.VX, is at the
centre of a U.S. probe into whether it helped wealthy Americans
to hide untaxed money in Swiss bank accounts, experts say.
[ID:nLI402895] [ID:nLD494952] [ID:nLB79992]
"The milestone in this agreement is that you'll no longer
have the principle of double criminality as a required element,"
Max Hohenberg, a spokesman for Liechtenstein's government, said.
"For the purpose of this agreement there is no distinction
between tax fraud and tax evasion."
Liechtenstein's banks administer assets worth around 200
billion Swiss francs ($165.2 billion), a fraction of the 4.5
trillion francs of assets administered by Swiss banks.
Under the terms of the agreement, the result of two years of
negotiations, there will be no automatic exchange of information
but Liechtenstein may lift its strict bank secrecy code to
assist the United States in specific tax investigations.
"We will have a clear legal framework even if this means
that a U.S. citizen under investigation in the United States
with undeclared assets in Liechtenstein may have his data
exchanged," Hohenberg said.
Previously, the U.S. had to prove a deliberate tax fraud --
a standard so high it made bank accounts in the small country
impenetrable to outsiders.
The agreement will enter into force on Jan. 1, 2010, and
will look at tax matters from 2009 onwards.
"Anything before that is not part of the agreement,"
PRESSURE ON SWITZERLAND?
Liechtenstein -- one of three countries blacklisted by the
Organisation for Economic Cooperation and Development, along
with Monaco and Andorra -- was the target of a recent German
investigation into thousands of citizens suspected of parking
untaxed income in the principality. [ID:nLS349361]
The tiny Alpine nation, wedged between Switzerland and
Austria and with a population of about 35,000, has said it is
ready to sign deals similar to the one agreed with the United
States with any European Union nation if they, in return, agree
to bilateral double-taxation treaties.
Switzerland, which has already signed a cooperation
agreement with the United States, is reluctant to exchange bank
client data with other jurisdictions in matters of tax evasion.
"Switzerland gives administrative assistance when the
criteria of dual criminality is met: a crime that is so both in
Switzerland and in the other state," said Andreas Missback,
joint managing director for the Private Finance Programme at the
Berne Declaration, a Swiss organisation that campaigns to lift
bank secrecy for tax evasion.
"Tax evasion is not a criminal offence in Switzerland and
the threshold is very high. If it can be proved that someone has
forged documents, this is fraud," Missback said.
However, things may change after the U.S.-Liechtenstein
"I would expect the pressure (on Switzerland to act) to
increase (after Liechtenstein)," said Sebastian Dovey at Scorpio
Partnership, a consultancy that specialises on private banking.
"It is hard to defend bank secrecy if the consequence is that
you are hurting another country."
Well-respected Swiss newspaper NZZ am Sonntag said on Sunday
that the deal was a "bad omen" for Switzerland.
The Swiss banking association, however, denies the deal
could pressure Switzerland to take a similar step as it has a
long-standing taxation agreement with the United States.
"This is an autonomous decision from Liechtenstein, that
does not signal anything for Switzerland," Thomas Sutter, a
spokesman for the lobby group, was quoted as saying by NZZ am
Sonntag. "The situation of both countries is very different."
(Additional reporting by John O'Donnell; editing by Simon