Disclosure of cross-border tax planning arrangements
According to the OECD, the lack of comprehensive and relevant disclosure about potentially aggressive or abusive tax planning strategies is one of the major challenges facing tax authorities. Hence, on 8 March 2018 the OECD published its Mandatory Disclosure Rules (MDR) for aggressive tax planning. They introduce, for instance, an obligation on fiduciaries, lawyers and banks to transparency about reporting avoidance arrangements.
In this context, the EU, with the amendment to the EU Mutual Assistance Directive (Directive 2011/16/EU – “DAC 6”) which came into effect on 25 June 2018, has introduced a disclosure requirement for cross-border tax arrangements.
Automatic exchange of information (AEOI)
Liechtenstein was among the so-called early adopter countries that signed the multilateral agreement on the automatic exchange of information, the so-called Multilateral Competent Authority Agreement (MCAA), on 29 October 2014. To date, 108 countries and financial centres have signed up to the AEOI. On 22 August 2016, Liechtenstein took another important step towards the implementation of its financial centre and tax strategy. The Government deposited its instrument of ratification for the Council of Europe and OECD Convention on Mutual Administrative Assistance in Tax Matters (MAC) at the OECD in Paris.
The Liechtenstein FATCA Law ensures that Liechtenstein’s financial institutions can operate in the US capital market. On 16 May 2014, Liechtenstein and the USA hence concluded an agreement (Intergovernmental Agreement according to model 1) on the implementation of the Foreign Account Tax Compliance Act (FATCA). This US Act obliges financial institutions worldwide to identify their US clients and to disclose their assets and revenues to the Internal Revenue Service (IRS) of the United States. The information goes beyond the provisions of the Qualified Intermediary (QI) regime.