The tax haven of Liechtenstein has signed an agreement aimed at uncovering the finances of an estimated 5,000 British investors with secret bank accounts there.
The move gives Britons five years from 2010 to declare their assets in the tiny Alpine principality and receive favourable treatment in paying the taxes they owe.
The penalties for people who are found to have evaded taxes will be capped at 10 per cent of the full amount.
The deal is the latest amnesty to be announced amid a global crackdown on offshore tax dodging. Britain has launched a more general programme and the United States and Italy are also encouraging offshore bank clients to come clean.
Liechenstein’s prime minister, Klaus Tschuetscher, said: “With this agreement we are creating a stable and reliable regulatory framework and for the client the possibility to make use of an attractive option.”
Earlier this year, Liechtenstein’s government agreed to start co-operating with other nations on tax matters and has since signed deals with the United States and Germany aimed at exposing tax evaders from those countries.
Britons have an estimated £2-3 billion deposited in Liechtenstein bank accounts.
But a Liechtenstein government spokesman said the country was not disclosing any client data under the deal. “We are achieving tax transparency without breaching the privacy rights of any clients,” he said.
Liechtenstein had been under intense pressure since Germany obtained confidential data on LGT, the country’s largest bank, with names of German citizens hiding money in the tiny principality, wedged between Switzerland and Austria.
Germany has accused Switzerland and Liechtenstein of actively encouraging Germans to dodge taxes, estimating the annual loss to government coffers from tax evasion at 100 billion euros.
Facing a crackdown on tax evasion by G20 countries, Liechtenstein and Switzerland – along with several other offshore centres – agreed in March to relax their strict bank secrecy rules and embrace tax co-operation rules set by the Organisation for Co-operation and Economic Development (OECD).
Liechtenstein was previously on the OECD’s “black list” of unco-operative tax havens, along with Andorra and Monaco, but all three countries were removed from the list in May after committing to adopt OECD standards.
Liechtenstein said it was also starting negotiations with Britain on a double taxation agreement.