The Principality of Liechtenstein and the Federal Republic of Germany have recently signed in Berlin a bilateral double taxation agreement (DTA) between the two countries, intended to secure mutual legal, planning and investment security.
During the signing, German Finance Minister Wolfgang Schäuble and Liechtenstein’s Prime Minister Klaus Tschütscher highlighted the fact that improved tax relations resulting from the agreement would serve to strengthen and to promote the very close economic ties between the two countries.
Outlining the cornerstones of the agreement, the finance ministries of Germany and Liechtenstein emphasized that the text would provide a solid basis for mutual investments. The ministries pointed out that the DTA would provide for a 0% withholding tax rate on payment of certain dividends, interest and royalties.
According to the ministries, the DTA also contains regulations designed to prevent misuse of the treaty, to ensure that the agreement is not used as a means to evade taxes, as well as a comprehensive binding arbitration clause.
In their joint release, the ministries alluded to the tax information exchange agreement signed by the principality and Germany back in September 2009. In accordance with the Organization for Economic Cooperation and Development’s standard, providing for cooperation and for an exchange of information in tax matters, the agreement entered into force in October 2010.
The latest DTA marks a further significant step towards deepening cooperation in the area of taxation, the ministries added.
While underscoring that the agreement does not contain provisions pertaining to a procedure for taxing German investors’ undeclared income in Liechtenstein banks, the ministries underscored that these issues would form the focus of separate discussions between the two countries.
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