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Germany Amps Up Pressure on Liechtenstein

Germany's finance minister increased pressure on tiny Liechtenstein to help combat tax evasion, raising the possibility of restricting business with the principality if it does not cooperate, according to an interview released Saturday.

German officials are urging Liechtenstein to make quick progress toward increasing the transparency of its financial system amid a large-scale tax-evasion investigation that centers on money Germans allegedly stashed in the Alpine tax haven.

"There is the possibility of cooperation -- we would like to conclude a double taxation agreement with Liechtenstein," Finance Minister Peer Steinbrueck was quoted as saying by the Bild am Sonntag newspaper, which released his comments before publication Sunday. Such an agreement also should allow Liechtenstein to assist in uncovering tax evasion, he added.

"But if we do not make progress there, we must take other measures at European or German level -- I am thinking of the possibility of making business dealings with Liechtenstein considerably more difficult," Steinbrueck said, according to the report. He did not say how that might be achieved.

German officials have pinpointed Liechtenstein foundations as a problem. German investigators allege they can be used for evading taxes.

Liechtenstein officials defend the practice of allowing foreigners to open trusts there anonymously by registering them through a local attorney or trustee, and say reforms currently being prepared are unrelated to the German scandal.

"We must get to a point where no more taxes can be evaded with the help of these so-called foundations," Steinbrueck was quoted as saying. "Liechtenstein must change the framework with which it invites tax evasion in Germany or elsewhere."