Protestors demonstrate outside the courthouse where the trial of Klaus Zumwinkel, former Deutsche Post AG chief executive officer, is taking place, with a banner reading “With the death of rule of law comes freedom for the rich,” in Bochum, Germany,

Liechtenstein has offered to conform to global rules in the fight against tax avoidance, saying it will seek agreements with other states in an attempt to shed its status as a rogue tax haven.

“We are currently experiencing a fundamental and rapid change at the global level in the direction of stronger cross-border cooperation and international regulation,” Crown Prince Alois said in the “Liechtenstein Declaration.”

European governments, led by Germany and France, have demanded more cooperation from non-EU countries in the fight against tax evasion as they seek to boost revenue amid the worst financial crisis since the Great Depression. Liechtenstein already negotiated a tax-information agreement with the US in December.

The principality came under scrutiny a year ago when Germany used bank data purchased from a former employee of LGT Group, the bank owned by the ruling family, for as much as €5 million (US$6.3 million) to open a tax-evasion probe of some 900 suspects, including former Deutsche Post AG Chief Executive Klaus Zumwinkel. Alois, who rules the country as the heir to the princely seat, called the investigation an “attack” on Liechtenstein at the time.

Legal certainty

Liechtenstein now says it will offer tax agreements to individual states that may exceed OECD standards, as it seeks to create legal certainty for banking clients while keeping the principle of client confidentiality. The principality’s leaders have said they want to move ahead with a tax-fraud agreement with the EU, including a renegotiation of a savings-tax agreement.

Tax fraud is a crime in the principality, while tax evasion is a lesser offense, complicating efforts for legal-assistance treaties with countries that view evasion as a crime.

The OECD, which includes Andorra and Monaco on its list of uncooperative havens, has said Liechtenstein has taken steps in recognizing the need for more transparency. The organization is currently compiling a new “black list.”

The new offer is part of a campaign by incoming Prime Minister Klaus Tschuetscher, 41, who pledged last month to work with other countries to resolve tax disputes.

Tschuetscher’s party, the Patriotic Union, or VU, won the national election last month.

Power in the principality centers on the prince, who has the authority to dissolve the assembly and appoint a new government.

Liechtensteiners voted in 2003 to extend the princely house’s powers after Prince Hans-Adam II, who in 2004 gave his governing authority to his son, threatened to leave the principality.

Source: Bloomberg