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Liechtenstein: Law of Offshore
In November, 2004, Liechtenstein's Financial Services Authority announced that following Parliament's approval in June of the new Law (Organization Act) on Supervision of the Liechtenstein Financial Market, the new, independent, and integrated Financial Market Authority created by the Act would commence operations on 1 January 2005.
The new single authority assumed the functions and responsibilities of the three existing regulatory bodies, namely the Financial Services Authority, the Due Diligence Unit, and the Insurance Division of the Office of Economic Affairs. The FMA also took over the existing staff of the three authorities.
Under the auspices of the legislation, the Financial Market Authority assumed responsibility for safeguarding the stability of the Liechtenstein financial market, the protection of customers, the prevention of abuses, and the implementation of and compliance with recognized international standards.
The core responsibilities of the FMA encompass the supervision and regulation (on behalf of the Government) of the Liechtenstein financial market, although the FMA is independent of the Government and of the financial market participants under its supervision.
The Law on Asset Management (Asset Management Act, AMA) entered into force on 1 January 2006. This Act lays the foundation for asset management companies as new, internationally recognized financial intermediaries. The FMA supervises implementation of the Asset Management Act and the related ordinances as well as compliance with regulations.
The government of Liechtenstein announced on March 12, 2009, that it would commit to the Organisation of Economic Cooperation and Development's (OECD) standard on exchange of information for tax purposes, and stood ready to enter into bilateral tax agreements with individual states.
Under immense pressure from neighbouring Germany to dispense with banking secrecy laws following the previous year's highly publicized tax scandals, and with the Obama administration in the US demonstrating an equal level of hostility towards what it considers to be offshore 'secrecy' jurisdictions, then Prime Minister Otmar Hasler said that the jurisdiction has become "aware of [its] responsibility as part of a globally integrated economic area."
"With today's declaration, we are making our contribution to a joint solution that will make an effective enforcement of foreign tax claims possible and takes account of the legitimate interests of the clients of our financial centre at the same time," Hasler announced.
"Our bank secrecy has always served to ensure the legitimate protection of the privacy of the citizen, which we will continue to retain. With this declaration, however, we want to make clear that bank client confidentiality in future cannot be misused to facilitate tax crime," said Hasler.
It emerged in November 2009 that the OECD has recognized Liechtenstein's implementation of the agreed international tax cooperation standard, and has removed the jurisdiction from its “grey list”.
"The removal from the so-called 'grey list' is a milestone in the reorientation of the Liechtenstein location," announced Liechtenstein’s Prime Minister Klaus Tschütscher. He added: "I took office to restore the reputation of our country with the steadfastness demanded by the situation. This is the only way we can do justice in the long term to the full potential of our businesses and service providers."
Angel Gurría, Secretary-General of the OECD, welcomed the news: "Liechtenstein has demonstrated that it honors its commitments and is actively contributing to the international dialogue on tax cooperation."
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Category: Financial services