Germany to ‘tighten screws’ on tax havens

By Bertrand Benoit and Hugh Williamson in Berlin

Financial Times
Published: February 22 2008 21:30

Germany plans to “tighten the screws� on Europe’s tax havens, the country’s
finance minister vowed on Friday amid a growing global government backlash
against financial centres with bank secrecy rules that foster tax evasion.

The warning from Peer Steinbrück marks another escalation of the tensions
with Liechtenstein that have flared over a mammoth tax investigation into
bank accounts of Germans held at the principality.

Mr Steinbrück said Berlin was considering bilateral measures against
Liechtenstein, such as levies on wire transfers to the principality or an
obligation for German banks to declare such transfers.

Angela Merkel, the German chancellor, also signalled she would press Monaco
to increase co-operation with tax authorities in other countries when
meeting Prince Albert, the principality’s ruler, on Wednesday.

Ms Merkel’s diplomatic push comes as a tax investigation of at least 750
suspected tax evaders enters its second week. The probe sprang from
documents about German accounts at Liechtenstein’s LGT bank, which the BND
intelligence agency bought for €4.2m ($6.2m) in 2006.

Other countries including the US, Finland and Sweden have opened, or are
considering opening, investigations.

Ms Merkel, who met Otmar Hasler, prime minister of Liechtenstein, in Berlin
this week, will discuss tax evasion next month with president Nicolas
Sarkozy of France, which has long pushed for Monaco to open up.

Thomas Steg, spokesman for Ms Merkel, said the chancellor would speak “clear
words� and tell the Monegasque monarch to adopt “fair behaviour�.

A spokesman for Mr Steinbrück said Germany was using “constructive dialogue�
with Liechtenstein and other tax havens. However, if this did not work then
“more unusual, bilateral steps� would be necessary, he added.

He said these steps would not occur before June at the earliest after a
meeting on international tax issues at the Paris-based Organisation for
Economic Cooperation and Development, which co-ordinates global efforts to
reduce tax-haven secrecy. Bilateral steps may be delayed until after the US
elections in November, as Washington has played an important role in the
OECD action against tax havens, he said.

Berlin has Liechtenstein, Monaco and Andorra in its sights, three countries
classified as “unco-operative� by the OECD because they refuse to disclose
the bank data of suspected tax evaders to foreign law-enforcement
authorities.

Additional reporting by Gerrit Wiesmann in Vaduz and Frances Williams in
Geneva

http://www.ft.com/cms/s/0/e07996fc-e17a-11dc-a302-0000779fd2ac.html

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