Tax transparency: AEoI from 2017 onwards

in Financial Services, Tax, 19.03.2015

After the launch of the consultation for the implementation of the AEoI in Switzerland in January 2015, the Swiss Federal Council is taking another important step towards the The Automatic Exchange of Information (AEoI) in Switzerland: Switzerland and the EU agreed on 19 March 2015 that the AEoI will enter into force between Switzerland and all EU member states in 2017. The first exchange of information between Switzerland and the EU member states relating to the year 2017 will therefore occur in September 2018.

The Automatic Exchange of Information

The AEoI is the systematic and periodic transmission of information of a taxpayer’s assets and income in one country usually to the taxpayer’s country of domicile. So far around one hundred states have agreed on the implementation of the new standard, amongst them all important financial centers. Around 50 Early Adopter States (including most EU member states and other countries such as Liechtenstein, Argentina and Mexico) intend to exchange the relevant information already in 2017 relating to 2016.

The Agreement with the EU

The EU Savings Tax Agreement will be replaced with the AEoI. Once the AEoI enters into force the EU Savings Tax Agreement with the respective state will expire and the clients concerned will only be reported under the AEoI standard.

Switzerland has already negotiated tax agreements with the UK and Austria, which has been in force since 1 January 2013. These agreements ensure the taxation of Swiss banking clients resident in the UK and Austria without jeopardizing their financial privacy.

Based on the already existing information regarding the agreement with the EU on the AEoI we assume that the tax agreements with the UK and Austria will also be replaced by the AEoI as per 1 January 2017.

Regularization of the past as a pre-condition for the AEoI

Neither the AEoI standard nor the agreement with the EU will resolve the regularization of the past.

Non tax-compliant foreign clients of Swiss financial institutions are now may assume, that there is enough time to file a voluntary disclosure before the first data transmission under the AEoI in 2018.

However this assumption is associated with considerable risks: Foreign states are already now able to obtain information about clients of Swiss financial institutions by requesting administrative assistance via group requests. Furthermore, the states have a different approaches to judge until when a voluntary disclosure can be filed, in order to have a mitigating effect.

The next steps for the implementation / introduction of the AEoI in Switzerland

The parliamentary debates on the implementation of the AEoI in Switzerland will start in 2015. Even in case of a referendum against the decision of the parliament, the AEoI between Switzerland and the EU member states will come into force as per 1 January 2017. Moreover Switzerland will reach agreements with further states to introduce the AEoI as per 1 January 2017 during the months to come. Such agreement has just been signed with Australia on 3 March 2015.

 

 

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