A prince of the House of Liechtenstein, one of the world’s wealthiest royal families, is being investigated for tax evasion in Germany.

Prince Max von und zu Liechtenstein, chief executive of the principality’s largest bank LGT and son of the ruler Hans-Adam II, has been accused of withholding millions in taxes.

Based in Munich, he is the most prominent figure to be affected by one of the greatest tax evasion scandals of recent times after one of his former employees sold confidential bank data to the German equivalent of MI6, prompting a widespread investigation into more than 900 super-rich Germans suspected of withholding €200million (£176million) in taxes.

Klaus Zumwinkel, the former German Post chief executive and Morgan Stanley director, received a two-year suspended sentence and a €1million fine for evading taxation after authorities found details of his financial dealings with LGT in the leaked data.

"I have always fulfilled my tax duties in Germany to the best of my knowledge," Prince Max, 39, said in a statement. If, contrary to my conviction, it turns out that I owe taxes to the German state, I will meet my obligations promptly."

German investigators have already secured a confirmation from their foreign ministry that Prince Max does not enjoy diplomatic immunity and can be tried according to German law. The prince is accused of owing taxes on the assets of a foundation set up by his family for its members because most of the payments from it went to him, according to German prosecutors.

His lawyers dispute the accusations, claiming that the assets belong to the Liechtenstein family and not the prince.

The investigation against Prince Max could increase the tensions between Germany and Liechtenstein, caused by the crackdown on suspected tax evaders who deposit their money in the tiny tax haven squeezed between Switzerland and Austria. It is believed that about 1,400 Liechtenstein foundations have been established by German citizens to avoid taxation but, following the purchase of the confidential data, Prince Max’s brother, Prince Alois, accused German authorities of “handling stolen goods” and blamed their taxation system and the “criminal energy” of Germans for the scandal that has now affected his family.

The LGT bank, whose slogan is “Invest like a Prince”, manages more than €63 billion for as many as 77,000 clients, much of it invested in various foundations that take advantage of Liechtenstein’s favourable tax laws.

Less than two weeks before German prosecutors announced they were investigating Prince Max, he stated that his country was ready to consider working more closely with Germany's tax authorities. Speaking to a German newspaper, the prince said that his LGT bank has lost billions of Swiss francs in client funds since the beginning of the tax scandal prompted by the leak of the data.

The prince has been hailed as a highly successful manager with an unusually moderate lifestyle. Choosing to drive a standard Audi instead of a luxury sports car, as customary in his circles, he was deemed an “embodiment of understatement” by friends. The prince, however, admitted that he had “sounded the alarm” as Mr Zumwinkel and one of his clients, was arrested last year.

“I was in Munich when I heard the news and climbed into my car immediately and drove back to Liechtenstein. I called up eight to ten people and summoned a crisis squad,” he said.

German authorities have already sold or given access to the confidential data from the bank to countries including Britain, Sweden, France, Italy, the United States, Canada and Australia, which are now conducting their own investigations.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive