Liechtenstein's LGT Seeks Tax Declaration From Trust Clients

ZURICH --Private bank Liechtenstein Global Trust Group Monday said it wants to crack down on foreign clients using investment trusts to hide assets from tax authorities at home, a major concession to the European Union and others moving to crack down on tax loopholes connected with Liechtenstein.

Liechtenstein's tax law is particularly accommodating of trusts, which detractors say allow clients to hide assets from tax authorities at home. Until now, Liechtenstein's banks have shown little inclination to urge clients to comply with their home country's tax laws.

LGT's move "encompasses, in particular, ensuring that its established trust solutions are in alignment with taxation law in its clients' countries of origin," the private bank said in a statement.

LGT is the Liechtenstein private bank which sparked a crackdown on alleged tax evasion in the tiny nation after the German authorities obtained a CD-ROM of alleged tax cheats with accounts at the bank.

The European Union has vowed to pursue tax loopholes connected to the trusts, which originate from differences in how tax evasion is treated in both Liechtenstein and neighboring Switzerland. In the two countries, tax evasion isn't pursued as a criminal offense, unlike in most other countries.

"What will change is that we as a bank won't say any more: 'We're not interested in whether the client is declaring his assets on taxes at home,'" said Christof Buri, a spokesman for LGT, which is owned and run by Liechstein's royal family. "In the future, this will be of interest to us," he added.

Company Web site: www.lgt.com

-By Katharina Bart, Dow Jones Newswires; +41 43 443 8043; katharina.bart@dowjones.com