Liechtenstein reaching a "reasonable" deal with the European Union over tax fraud.

The prime minister of Liechtenstein, which is at the centre of a tax evasion scandal, said yesterday talks were well advanced on reaching a "reasonable" deal with the European Union over tax fraud. "Our aim is to achieve a successful conclusion of the comprehensive tax fraud agreement that is currently under negotiation," Otmar Hasler said after signing a deal on joining Europe's border-free area of 24 nations. "Of course, we will continue to represent the legitimate interests of our citizens in these negotiations, as our European partners do," Hasler said in a statement. Countries across three continents have launched raids on suspected tax dodgers and pressure has increased on Liechtenstein to lift the cloak of secrecy covering its banks' operations. Liechtenstein, a tiny country with a population of 35,000 sandwiched between Switzerland and Austria, depends heavily on its banking sector. Germany has spearheaded a crackdown on tax havens after suspicions that hundreds of rich Germans evaded taxes by parking money in Liechtenstein banks. It wants the principality to take rapid action to combat fraud and make its finance sector more transparent.
Liechtenstein said yesterday it had no choice but to investigate the theft and sale to Germany of bank data that has sparked a global hunt on tax evaders because the actions constituted a crime. "We had to act. The investigation is a very serious matter because misappropriation of bank data is a crime," Justice Minister Klaus Tschuetscher told a press conference in Vaduz. He called on Germany to cooperate with the probe and to identify the intelligence agents who bought the data from a whistleblower, alleged to be a former Liechtenstein bank employee, for four million euros. Tschuetscher said Berlin was obliged to do so under a justice cooperation pact between Germany and the principality, where prosecutors on Wednesday announced a preliminary investigation against the suspected informant, Heinrich Kieber, "and others." Kieber is a former employee of Liechtenstein's LGT bank, which claims that a client list stolen from it in 2002 is being used by Germany as the basis for the country's biggest tax fraud probe ever. Germany has made the list featuring the names of 1,400 foreign investors in Liechtenstein available to other nations.
This week, 10 other countries-including the United States, Britain, France and Austrialia-announced investigations into suspected tax fraud through Liecthenstein, putting the principality under international pressure over its tax haven status.
It has resisted calls for greater cooperation on fighting cross-border tax fraud and accused Berlin of violating its sovereignty by spying on its banks and buying secret data. Germany has in turn threatened to isolate Liechtenstein from its European neighbours. When asked if Germany could hold off on ratifying Liechtenstein's accession to the European border-free area, Interior Minister Wolfgang Schaeuble told reporters in Brussels "in principle we are willing to ratify it, but there have been talks (on combating fraud), and they have to show some effect".
Liechtenstein is one of three countries on the Organisation for Economic Cooperation and Development's (OECD) black list of uncooperative tax havens, alongside Andorra and Monaco. The European Commission says the Schengen deal will oblige Liechtenstein to boost cooperation with EU countries in fraud investigations but will not make it alter its tax laws.