Banking secrecy defended

Liechtenstein is battling to defend its tradition of banking secrecy in the same way as its neighbour Switzerland, senior bankers in the tiny Alpine principality said yesterday.

The EU is racing to reach an agreement by the end of the year with six countries - Andorra, Liechtenstein, Monaco, San Marino, Switzerland and the US - to prevent tax evasion by EU citizens who put their money in banks abroad. At stake for some of the countries, notably the two Alpine states, are banking secrecy laws prohibiting banks from giving data to tax authorities even at home.

Of the 113 billion Swiss francs (€77 billion) managed by banks in Liechtenstein, about 40 billion Swiss francs come from the EU, says Mr Adolf Real, president of the Association of Liechtenstein's Banks. "It's clear we're towing the same line as Switzerland, we're in the same boat," Mr Real said at a bankers' seminar on the discussions with the EU. None of the funds is subjected to a capital gains tax - which does not exist for the 30,000 inhabitants of the Alpine safehaven.

But tax authorities say they are considering the same withholding tax on interest payments that the Swiss are ready to introduce for the EU to discourage tax evasion, "provided that banking secrecy remains untouched". - (AFP)