Evading Canadian taxes in Liechtenstein? The tax man cometh for you...
If you are hiding your money from Ottawa in the principality of Liechtenstein you may want to move it out of there.
Ah, Liechtenstein, the tiny landlocked nation nestled between Switzerland and Austria that is trying desperately to shed its notorious tax haven status. Nothing has been the same since 2000, when two big international reports slammed the principality for a banking system that enabled Russian, Italian and Colombian gangs to launder money easily, according to the BBC.
Liechtenstein is one of Europe's last states to be ruled by a monarchy. The German speaking nation is home to about 37,000 people. (No, Anne Hathaway does not live there with Julie Andrews.)
On January 26, the Canadian government's agreement with Liechtenstein for the Exchange of Information on Tax Matters, came into full force.
To mark the occasion, Foreign Affairs Minister John Baird travelled to Liechtenstein on Monday to meet with Hereditary Prince Alois. Baird did not have to travel far as he was previously over in Davos at the World Economic Forum.
"Liechtenstein has been a reliable partner for Canada in promoting human rights and the rule of law," said Baird, according to a statement from the Department of Foreign Affairs.
The agreement is being hailed as an important step in the fight against international tax evasion.
According to the Canadian Department of Finance release, the two nations both recognize the "well-developed economic ties" between the two parties and they wish to "further develop their relationship by co-operating to their mutual benefit in the field of taxation."
What does that mean? It means both parties have to hand over all tax information, including that which could be possibly relevant to the determination, assessment and collection of a persons taxes, tax claims and the investigation or prosecution of that persons tax matters.
For Canada, that simply includes all tax information administered by Ottawa. But for Liechtenstein, the agreement covers a host of complicated tax information laws governing personal, corporate, real estate capital gains tax, wealth tax, coupon tax, estate and inheritance tax, even value-added tax.
What exactly does the agreement cover when it refers to the sharing of all tax information?
It means turning over any fact, statement or record in any form, whatsoever. Translation: You have got to find someplace else to hide your undeclared income.
Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga