Switzerland To Add Info Exchange Provisions To All DTAs
The Swiss Federal Council has launched a consultation on legislation for the unilateral application of the Organisation for Economic Cooperation and Development’s (OECD’s) Standard on the Exchange of Information to all double tax agreements that are not already in line with this model.
The legislation would only involve the exchange of information on request and would make no provision for the spontaneous or automatic exchange of information.
The proposed mechanism would be a transitional measure. Once a state or territory becomes able to exchange information upon request with Switzerland on the basis of a DTA in conformity with the OECD standard or another international agreement, the legislation would no longer be applicable to that jurisdiction. The legislation would be repealed as soon all of Switzerland’s double tax agreements are amended to include tax information exchange provisions in line with international standards.
38 of Switzerland’s active DTAs contain up-to-date information exchange provisions. If implemented today, the law would affect 69 states or territories.
Switzerland would still be able to refrain from responding to a request if the requesting state is not in a position to reciprocate in line with the OECD standard and is unable to comply with data protection rules and the principle of speciality.
This initiative is part of a wider Federal Council strategy to ensure that Switzerland is a competitive and tax-compliant financial center. Switzerland has signed the OECD/Council of Europe Convention on Mutual Assistance in Tax Matters and concluded seven Tax Information Exchange Agreements.
Earlier this month, the Federal Council announced that negotiations will be launched with the European Union on the automatic exchange of information. A Model One Foreign Account Tax Compliance Act (FATCA) Intergovernmental Agreement (IGA) will also be negotiated with the US to facilitate compliance with FATCA.