Geneva  - Liechtenstein and Luxembourg announced Wednesday they signed a double taxation agreement in line with the transparency standards demanded by a group of developed nations.

It was the first such transparent treaty that Liechtenstein, a tiny principality nestled between Switzerland and Austria that depends heavily on its financial sector, signed with another country.

Luxembourg Finance Minister Luc Frieden and Liechtenstein Prime Minister Klaus Tschutscher signed the double taxation agreement, which had been initialed last month, in Vaduz, the capital of the Alpine principality.

They stressed that the new treaty was in line with the models set out by the Organization for Economic Cooperation and Development - a think tank of developed market economies- for transparency in tax matters.

On Tuesday, Switzerland signed a revised double taxation agreement with Luxembourg, to enable easier exchange of tax information between the two countries.

Liechtenstein, along with Switzerland and other so-called tax havens, agreed in March to adopt OECD standards in cross-border tax cooperation.

The offshore centres said in March they would relax banking secrecy rules in return for remaining off a blacklist compiled by Group of 20 (G20) countries.

In December last year, the principality reached a tax exchange agreement with the United States and earlier this signed a deal with Britain aimed at recovering outstanding taxes from British investors Liechtenstein.

The Vaduz government said that with the signing of the new treaty, it was "clearly signaling its determination to implement its declaration of March 12 2009 on international tax cooperation."

The countries with banking secrecy rules need to meet a quota of 12 new double taxation agreements to completing being removed from an OECD "grey list." Switzerland had already singed one with Denmark and was set to finalize another deal with France this month. (dpa)