EU signs a historic tax transparency agreement with Switzerland
The Automatic Exchange of Information is fast becoming widely recognised as the most effective instrument to fight against tax evasion. With cooperation between tax administrations being high on the agenda in the ongoing fight against tax evasion, protection of integrity of tax systems, and transparency processes seem to be infiltrating throughout jurisdictions worldwide with the aim to making the Automatic Exchange of Information, a tax standard throughout the European Union.
Automatic Exchange of Information involves systematic and periodic transmission of “bulk” taxpayer information by the source country to the resident country relating to various categories of income (including balance, dividends, interest etc.) and provides timely information of non-compliance where tax evasion has occurred.
The OECD have developed the Standard on the Automatic Exchange of Financial Account Information and are looking to bring transparency to tax jurisdictions worldwide, showing their commitment to the Automatic Exchange of Information.
This has been made even more evident by the historic transparency agreement signed between the EU and Switzerland on May 27th 2015, which is fully aligned to the OCED model, heralding the new era for tax transparency and cooperation between Switzerland and the European Union.
Europe’s Swiss bank account holders will have their information automatically shared with their home country, including financial and account balance information.
The agreement is to be enforced in 2018 after ratification in Switzerland – a process that could involve a referendum (according to Swissinfo.ch), and will put an end to bank secrecy for EU residents and facilitate cooperation between tax authorities.
European Union Economic Commissioner Pierre Moscovici stated that “this agreement is another blow against tax evaders, and another leap towards fairer taxation in Europe”.
The EU Commission is also currently concluding negotiations for similar agreements with Liechtenstein, Monaco, Andorra and San Marino, which should be enforced by the end of 2015.
