With worldwide financial markets fluctuating wildly, there is
hardly anywhere that the truly rich can count on their wealth being
safe. Up till now a numbered account in Liechtenstein was a great
place to keep away prying eyes.
One of the big problems that rich people have is making sure
they don’t pay a great deal of money in taxes. They go to great
trouble to accomplish this, and do it secretly. Here’s where the
nice people of Liechtenstein come in — or at least used to do
so.
Secrecy laws in this tiny state nestled conveniently between
Switzerland and Austria have provided the wealthy of many countries
a tax haven that kept their riches strictly a matter between them
and the authorities in Liechtenstein. Now this “bank-of -banks” has
decided to go legit. Quel dommage! Was ist los? Che cosa e
questo? Weh ist mir! I say, old chap! Holy crap!
The hereditary ruler of this hard working micro-nation, Prince
Alois, no slouch at finance, himself, has made it clear that his
mind is made up. His prime minister, Otmar Hasler, has been working
since 2000 to move the country into the financial mainstream, so
the recent pronouncements do not come as any great surprise.
Mr. Hasler was interviewed by the Financial Times, “We
are ready to adopt European standards,” he said. Prince Alois had
already made clear that financial information on foreign accounts
would be made available to other states on a “need to know” basis
if Liechtenstein’s authorities were convinced their clients would
not be excessively penalized. Or as the Prince diplomatically put
it, the foreign states were “willing to find sensible
solutions.”
THERE IS A LOT of old and new money dashing about looking for
different homes. But one need not feel too sorry for these untaxed
rich or for poor little beautiful Liechtenstein. According to its
economically savvy prime minister, the financial sector of his
country’s gross domestic product is only about 29%, while
manufacturing that runs the gamut from concrete products to high
tech amounts to 39%. The rest of the domestic economy is made up of
various aspects of tourism and agriculture.
The tax haven foundations and trusts have a bit of a problem.
Where to go, where to go? Prince Alois may be right that some can
work out a deal with their countries of origin — wherever that
might be. Sounds like a good idea, but a bit iffy. “Excuse me Mr.
Tax Collector, I have this loose 75 million bucks that I’ve
accumulated over the last twenty-odd years, and I’d like to bring
it home. How much do I have to give you to stay out of jail?”
It’s not that there aren’t places in the world to which one can
shift one’s assets. The Organization for Economic Cooperation and
Development (OECD) keeps an up-to-date list, if anyone really wants
to know. And yes, the Grimaldis’ little principality, Monaco, is
one of them, if you were wondering. By the way, Panama and
Singapore, among others, have some clever ways of “limiting
exposure,” according to international financial managers.
Terrorism really must be hated by the tax-avoiding super rich.
International cooperation on money movements has come under far
greater scrutiny since 9/11. There was a time when “reputable”
financial houses always could find a comfortable way to handle arms
money, drug money, and plain old embezzlement proceeds. They have
found the heat too great now that the Western intelligence agencies
on counter-terrorist missions have turned to ferreting out “funny
funds.”
YES, THE OLD DAYS are swiftly passing. The time is disappearing
when a decent chap with good club credentials could pop over to
Vaduz, Liechtenstein — or perhaps that smugglers’ haven in the
Pyrenees, Andorra — and pass a cashier’s check to a fluent “any
language-speaking” bank manager.
In exchange one could receive a number and instructions on how
to retrieve principal and dividends relatively tax free. Of course
there would be a rather steep carrying charge, but far less than
home country taxes would be. A million or two here, a few more
there — it all adds up. And Liechtenstein does have excellent
skiing in season.
Some say that because of the filthy rich Russian oligarchs who
didn’t want to let their tax police — or anyone else — know what
they have, the private banks of tax havens have overflowed with
cash. This, along with the terrorist financing issue, has brought
special attention to what was once an accepted privilege of the
decorous affluent.
To be fair, one would have to note that it has taken one of
Europe’s oldest noble families to begin to bring accountability to
an ancient banking privilege. Good show, Alois!
