The AEoI is an international procedural standard that regulates the exchange of information on assets held abroad between the tax authorities of participating countries. The objective is to prevent cross-border tax evasion. Already more than 100 countries, among them all of the important financial markets (except for the USA) have agreed to introduce the new standard. The so-called early adopter countries already exchanged data on 2016 in September 2017. Other countries, including Switzerland, exchanged data on 2017 for the first time in September 2018. In September 2018, Switzerland exchanged data with the EU member-states and nine other countries. Already in 2019, it will exchange data with another about 40 countries (for a list of these countries, click here).
The AEoI applies not only to foreign account holders but also to controlling persons of asset management structures, such as trusts, foundations and domiciliary companies. Furthermore, a trust, foundation or domiciliary company that qualifies as Investment Entity, is required to report under the AEoI by itself.
- 1 Preparation of the rule of law 01/15-04/15
- 2 Consultation period 05/15-09/15
- 3 Result of consultation 10/15-12/15
- 4 Treatment in the Parliament 10/15-12/15
- 5 Publication of final decree 01/16-12/16
- 8 Application of the rule of law 01/17-
In view of the fact that the AEoI has entered into force on 1 January 2017, financial institutions have already implemented most AEoI requirements and duties. Nonetheless, we think that banks should consider especially the following aspects:
- Overreporting: They have to make sure that they do not report the wrong clients in the context of AEoI.
- Underreporting: It is just as important that they identify and report all of the reportable clients.
- Classification of legal entities: Depending on the classification, the reporting requirements can differ significantly, which is why for clients or Controlling Persons the classification is of the utmost importance.