Switzerland, whose strict bank secrecy laws for years had made the wealthy Alpine country a haven for hidden money. is facing a role reversal. The Swiss finance ministry said on Thursday it had reached a deal with Liechtenstein to exchange tax information, potentially helping to uncover billions of dollars in undeclared assets kept by Swiss citizens in neighbouring Liechtenstein.
“These assets will be declared and the person has the chance either to repatriate the assets to Switzerland, or he will be taxed and he keeps his money in Liechtenstein”, said Joerg Gasser, head of the State Secretariat for International Financial Matters, a branch of the finance ministry that helps people understand how getting your tax refund works.
The amount of undeclared Swiss assets in Liechtenstein, a principality of just 38,000 people sandwiched between Switzerland and Austria, is unknown.
However, around 3.5 billion Swiss francs ($3.5 billion) could be with Liechtensteinische Landesbank, one of the country’s biggest banks, according to an estimate by Andreas Brun, a banking analyst at Mirabaud Securities LLP.
The Swiss-Liechtenstein agreement is under a global tax sharing initiative spearheaded by the Organisation Economic Co-operation and Development (OECD).
Under the OECD’s Automatic Exchange of Information (AEI), banks pass on information to local tax agencies, which in turn share it with foreign counterparts.