Switzerland Commits To Automatic Tax Information Exchange
Friday, October 10, 2014
On October 8, 2014, the Swiss Federal Council adopted definitive mandates for negotiations with other countries to introduce the new global standard for the automatic exchange of tax information in tax treaties.
Negotiations will be launched with the European Union (EU) on the automatic exchange of information. A Model One Foreign Account Tax Compliance Act (FATCA) agreement will also be negotiated with the US for the implementation of FATCA. The agreements will allow data to be exchanged automatically between the competent authorities on a reciprocal basis.
Negotiations on the automatic exchange of information will be initiated with further selected countries. Consideration will be given to countries with which Switzerland has close economic and political ties and those that provide their taxpayers with sufficient scope to regularize their affairs.
New laws are being prepared by the Federal Department of Finance (FDF) and will be submitted to Parliament alongside the negotiated agreements.
The Federal Council said that Switzerland welcomes the new standard, having contributed actively to its creation. According to the Council, the standard allows for a level playing field between financial centers. The Council stressed that domestic bank client confidentiality will not be breached following the standard's implementation.
Switzerland has been clear that the exchanged information should be used solely for the agreed purpose (the principle of speciality), the exchange should be reciprocal, data protection should be ensured, and the beneficial owners of trusts and other financial constructs should be identified. The Council has also stated that issues surrounding the regularization of past tax dues and market access must be addressed. It said solutions will be sought in negotiations with the EU and EU member states.
The Council has also agreed to a letter being sent by the FDF to the Global Forum on Transparency and Exchange of Information for Tax Purposes, which reaffirms Switzerland's intention to introduce automatic information exchange in a timely manner.
Swiss financial institutions could begin collecting the account data of foreign taxpayers in 2017. The first exchange of information could take place in 2018, subject to parliamentary approval of the necessary laws.
A group of over 40 states, being called "early adopters," have announced that they will start collecting information in 2016 and intend to exchange it for the first time in 2017.