Switzerland Signs Up To Exchange Information

The Swiss Federal Council has signed the OECD’s Multilateral Competent Authority Agreement on automatic exchange of information on tax matters, to start from 2018.

A few years ago the Swiss Finance Minister vowed that banking secrecy would survive, saying opponents would have to “bite the bullet” and accept it. Much has changed since 2008 however, and Switzerland has now signed up to automatically share financial data with countries across the world.

On 19th November 2014 the Swiss Federal Council signed the Organisation for Economic Cooperation and Development’s (OECD) Multilateral Competent Authority Agreement on automatic exchange of information on tax matters. It will need to be approved by parliament, and possibly subject to a referendum.

The Swiss government had already adopted mandates to begin negotiations with the EU and some other countries on automatically sharing information.

The OECD agreement was signed by 51 other countries at its Global Forum in Berlin at the end of October.

A group of 58 early adopters has pledged to start exchanging information by September 2017. This includes most of the EU, Channel Islands, Isle of Man, Gibraltar, some Caribbean financial centres, Argentina and South Africa.

So far 35 other jurisdictions are expected to follow in 2018. Besides Switzerland this includes Singapore, United Arab Emirates, Hong Kong, Monaco, Australia and Canada.

As the UK Chancellor, George Osborne, commented, “We expect this will provide tax authorities across the world with the details of billions of pounds of assets held overseas”.

Tax authorities will be able to compare the data they receives on their taxpayers with the information declared on their tax returns.

The OECD’s global standard on automatic exchange of financial information for tax purposes covers entities like trusts and foundations, as well as accounts held by individuals. The information to be exchanged includes account balances, interest, dividends and the sales proceeds from financial assets.

The OECD explains that automatic exchange of information “can provide timely information on non-compliance where tax has been evaded either on an investment return or the underlying capital sum, even where tax administrations have had no previous indications of non-compliance.”

The move to this data sharing has already earned governments welcome extra revenue, even though it has not started yet. Since 2009, voluntary disclosure initiatives by 20 countries have generated €37 billion in revenue, as people realise there will soon be nowhere to hide from the taxman.

The cross-border tax landscape has changed considerably. It is important to be informed on developments and take specialist advice to ensure your tax planning conforms to local tax law and does not result in unexpected consequences. With expert advice, it is possible to take advantage of tax compliant opportunities to protect your assets from the various taxes in Spain, France, Portugal, Cyprus, Malta and the UK.

26 November 2014