BERLIN — German Chancellor Angela Merkel pressed the prime minister of tiny Liechtenstein on Wednesday for assistance in a large-scale tax-evasion investigation targeting hundreds of German citizens.
Merkel’s meeting with Prime Minister Otmar Hasler — who is also the Alpine principality’s finance minister — followed recriminations between politicians in both countries over the scandal. Merkel called the discussions, ‘‘open and constructive.’’
‘‘I asked that Liechtenstein help in clearing up the cases of tax evasion that have been discovered,’’ she said.
Merkel sought a more comprehensive anti-fraud agreement between the European Union and Liechtenstein and urged the principality to cooperate with the Organization for Economic Cooperation and Development.
Liechtenstein, along with Andorra and Monaco, is listed by the OECD as one of the world’s ‘‘uncooperative tax havens.’’
Hasler signaled his willingness to do what he could.
‘‘We have good relations with one another and are interested in keeping it that way,’’ he said.
Ahead of the meeting, Liechtenstein’s ruling Prince Alois said Germany should get its own tax system under control. He was critical of Germany’s foreign intelligence service, which paid an informant as much as 5 million euros ($7.3 million) for a CD-ROM containing names of account holders at a Liechtenstein bank.
Merkel asked for quick progress in increasing the transparency of Liechtenstein’s financial system — but also said she expected Germans to pay their taxes ‘‘here, according to the law.’’
German investigators allege that investors are using ‘‘foundations’’ in Liechtenstein, a nation of 34,000 people sandwiched between Austria and Switzerland, as a tax dodge.
Liechtenstein officials defend the practice of opening the trusts, done anonymously, by registering them through a Liechtensteiner attorney or trustee.
‘‘This is an institution that is more than 80 years old and it is not legitimate to equate the foundation law with tax evasion,’’ Hasler said.
Yet Merkel pointed to a U.S.-Liechtenstein agreement which, she said, provides for taxation of the foundations.
‘‘We say that what is possible with the United States ... should also be possible with the European Union,’’ she said.
Kurt Beck, the leader of Germany’s center-left Social Democrats — which makes up half of Merkel’s government — said Liechtenstein has lagged behind other nations in quashing illegal tax shelters.
‘‘That there is such behavior in mini-states such as Liechtenstein is something that one can only equate with a modern form of robber baronry,’’ he was quoted as saying in the German weekly Stern.
If EU pressure does not help, ‘‘we must also talk about sanctions, about whether we prevent financial transfers to a country that does not help clear up criminal behavior or even supports it,’’ he said, according to the report.
The tax-evasion probe last week led to the resignation of one of Germany’s most prominent executives, Deutsche Post CEO Klaus Zumwinkel. Tax inspectors launched a string of raids across the country this week.
Liechtenstein’s government said Wednesday that it was already tightening laws governing the foundations, but that the changes were unrelated to the German investigation.
Merkel’s meeting with Prime Minister Otmar Hasler — who is also the Alpine principality’s finance minister — followed recriminations between politicians in both countries over the scandal. Merkel called the discussions, ‘‘open and constructive.’’
‘‘I asked that Liechtenstein help in clearing up the cases of tax evasion that have been discovered,’’ she said.
Merkel sought a more comprehensive anti-fraud agreement between the European Union and Liechtenstein and urged the principality to cooperate with the Organization for Economic Cooperation and Development.
Liechtenstein, along with Andorra and Monaco, is listed by the OECD as one of the world’s ‘‘uncooperative tax havens.’’
Hasler signaled his willingness to do what he could.
‘‘We have good relations with one another and are interested in keeping it that way,’’ he said.
Ahead of the meeting, Liechtenstein’s ruling Prince Alois said Germany should get its own tax system under control. He was critical of Germany’s foreign intelligence service, which paid an informant as much as 5 million euros ($7.3 million) for a CD-ROM containing names of account holders at a Liechtenstein bank.
Merkel asked for quick progress in increasing the transparency of Liechtenstein’s financial system — but also said she expected Germans to pay their taxes ‘‘here, according to the law.’’
German investigators allege that investors are using ‘‘foundations’’ in Liechtenstein, a nation of 34,000 people sandwiched between Austria and Switzerland, as a tax dodge.
Liechtenstein officials defend the practice of opening the trusts, done anonymously, by registering them through a Liechtensteiner attorney or trustee.
‘‘This is an institution that is more than 80 years old and it is not legitimate to equate the foundation law with tax evasion,’’ Hasler said.
Yet Merkel pointed to a U.S.-Liechtenstein agreement which, she said, provides for taxation of the foundations.
‘‘We say that what is possible with the United States ... should also be possible with the European Union,’’ she said.
Kurt Beck, the leader of Germany’s center-left Social Democrats — which makes up half of Merkel’s government — said Liechtenstein has lagged behind other nations in quashing illegal tax shelters.
‘‘That there is such behavior in mini-states such as Liechtenstein is something that one can only equate with a modern form of robber baronry,’’ he was quoted as saying in the German weekly Stern.
If EU pressure does not help, ‘‘we must also talk about sanctions, about whether we prevent financial transfers to a country that does not help clear up criminal behavior or even supports it,’’ he said, according to the report.
The tax-evasion probe last week led to the resignation of one of Germany’s most prominent executives, Deutsche Post CEO Klaus Zumwinkel. Tax inspectors launched a string of raids across the country this week.
Liechtenstein’s government said Wednesday that it was already tightening laws governing the foundations, but that the changes were unrelated to the German investigation.