Change to Liechtenstein Disclosure Facility: “meaningful relationship” conditions

In the latest developments regarding the tax amnesty known as the Liechtenstein Disclosure Facility (LDF), yesterday the Liechtenstein government enacted an amendment to the UK Tax Information Exchange Agreement (TIEA) which will take effect on 1 September 2012. Liechtenstein has introduced new deposit requirements of up to 20% of bankable assets if people wishing to use the generous terms of the LDF are to be accepted as having met the required “meaningful relationship” test.

The Liechtenstein Disclosure Facility (LDF) is the real tax amnesty.  It is not limited to taxpayers with accounts or assets in Liechtenstein.  It’s available to anyone with undisclosed tax liabilities; but there is no necessity for a prior link with Liechtenstein!  However, one of the terms of the LDF is that anyone wishing to use it must create a “meaningful relationship” with Liechtenstein.  When the Liechtenstein Disclosure Facility was first announced such a relationship could be created by investing as little as £1 in the principality.  Over the past 12 months the amounts required by Liechtenstein financial institutions has increased; particularly since HMRC introduced a registration requirement known as a “Confirmation of Relevance”.  Liechtenstein is now aiming to take advantage of the commercial opportunities offered to it by the taxman’s generous tax amnesty by insisting on even greater levels of investment – for those people wishing to open accounts after 1 September this year.

The new minimum investment thresholds – in order to be to create a meaningful relationship and thus qualify for a Confirmation of Relevance (a requirement to use the Liechtenstein Disclosure Facility) are as follows.

  • For bank accounts: at least 20% of the relevant person’s worldwide assets held in banks (or a minimum Swiss Francs (CHF) 3 million) must be placed on account with a Liechtenstein bank.
  • In the case of Liechtenstein trusts and legal entities: if a legal entity is domiciled in Liechtenstein, or a trust is managed by at least one trustee domiciled in Liechtenstein, at least 10% of the relevant person’s assets (or a minimum of CHF 1 million) must be held on an account in the name of this legal entity or trust with a Liechtenstein bank.
  • In the case of foreign legal entities: if a legal entity is domiciled abroad but managed for the most part by members of the executive bodies domiciled in Liechtenstein, at least 15% of the relevant person’s assets (or a minimum of CHF 1 million) must be registered placed on an account in the name of this legal entity, or trust, with a Liechtenstein bank.
  • In the case of insurance companies: the relevant person must take out an insurance policy, issued by a Liechtenstein insurance company, with a minimum premium of CHF 150,000.

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