Liechtenstein, a principality once fabled for its banking secrecy laws, is losing its perch as one of the world’s top tax havens for the richest people on Earth.
The Alpine nation eliminated its banking secrecy laws four years ago under pressure from the U.S. and the European Union, sending clients to other jurisdictions and forcing one of Europe’s oldest banking hubs to recast its image.
“We’re not a tax haven, we’re a safe haven,” said Mario Gassner, chief executive officer of Liechtenstein’s Financial Market Authority, from his office on Landstrasse, the main street that cuts through the country’s capital city of Vaduz. “In the past, clients came to Liechtenstein to bring their money. Since 2008, our financial intermediaries have had to go to the clients.”
The European nation, which is one-20th the size of Rhode Island, remains a place favored by billionaires to stash the holding companies and investment entities that control their assets. IKEA founder Ingvar Kamprad, the world’s fifth-richest person, according to the Bloomberg Billionaires Index, controls the company’s intellectual property rights through a Liechtenstein foundation.
Margarita Louis-Dreyfus, chairman of Amsterdam-based food trader Louis Dreyfus Holding, the world’s largest cotton and rice dealer, owns 65 percent of the company through her family’s Liechtenstein-based holding company Akira. She has a $5.9 billion net worth.
Iris Fontbona, the matriarch of Chile’s richest family, controls their $15.7 billion copper fortune through holding companies overseen by several Liechtenstein-based foundations.
Global Shift
A small part of the $15.2 billion fortune controlled by Texas billionaire Elaine T. Marshall, 70, is based in Liechtenstein, where her late husband, E. Pierce Marshall, started a foundation for their grandchildren, according to his will. She controls almost 15 percent of Koch Industries Inc., the second-largest closely held company in the U.S.
A global shift in the movement of capital and the laws that govern it has followed the crackdown on financial secrecy. Assets under management at Western Europe’s private banks and offshore structures have declined by 2 percent since 2008, while Asia’s assets have grown about 15 percent to $8 trillion, according to a 2012 report by consultancy McKinsey & Co.
The Tax Justice Network, a U.K.-based organization that campaigns for transparency in the financial system, said wealthy individuals were hiding as much as $32 trillion offshore at the end of 2010. Since 2001, assets under management in Singapore, the heart of Asia’s private banking industry, have quintupled to S$1.4 trillion ($1.1 trillion), according to figures from the Monetary Authority of Singapore.