Administrative and mutual assistance in tax matters

Status as at January 2020

Brief summary

At the international level, Switzerland has two ways for exchanging information in tax matters. For tax proceedings, the exchange of information is carried out by means of administrative assistance, which may take place on request, spontaneously or automatically. For criminal proceedings, information can be exchanged on request by means of mutual assistance.

Administrative assistance

Switzerland's administrative assistance is mainly governed by bilateral agreements for the avoidance of double taxation. Apart from bilateral agreements for the avoidance of double taxation, administrative assistance can also occur on the basis of tax information exchange agreements. The Federal Council decided in March 2009 to extend administrative assistance and adopt the standard set out in Article 26 of the OECD Model Convention. This standard is now implemented when negotiating new double taxation agreements and revising existing ones.

Since 1 January 2017, assistance in the broad sense is also possible on the basis of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters drawn up by the Council of Europe and the OECD.

States with a clause according to the OECD standard can obtain information for tax purposes by referring to specific cases and submitting a concrete and reasoned request. Administrative assistance is provided irrespective of whether there is a crime such as tax fraud or a misdemeanour such as tax evasion. The Tax Administrative Assistance Act (TAAA) replaced the Ordinance on Administrative Assistance under Double Taxation Agreements on 1 February 2013. Since then, group requests are also permitted.

Developments regarding international standards have already led to two partial revisions of the TAAA. In this context, Switzerland introduced an exception to the notification procedure for persons concerned by a request for administrative assistance. As a result, since 1 August 2014 and in exceptional cases, persons who are the subject of an administrative assistance request can be notified only after data relating to them has been disclosed. The dispatch on the implementation of the Global Forum's recommendations on Transparency and Exchange of Information for Tax Purposes was adopted by the Federal Council on 21 November 2018. It proposes, among other things, an amendment to Article 18a of the TAAA concerning deceased persons. Accordingly, administrative assistance can now also be provided for deceased persons. Parliament adopted the implementing act on 21 June 2019. On 27 September 2019, the Federal Council decided to bring the Federal Act into force on 1 November 2019.

By acceding to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters drawn up by the Council of Europe and the OECD, Switzerland also introduced the spontaneous and automatic exchanges of information. To date, the spontaneous exchange only concerns forms relating to advance tax rulings. The provisions of the TAAA designed to implement this new form of exchange entered into force on 1 January 2017. The revised Tax Administrative Assistance Ordinance also came into force at the same time. The first spontaneous exchanges conducted by Switzerland took place from 1 January 2018.

In view of the introduction of the AEOI standard, the Federal Assembly signed the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (AEOI; MCAA) on 19 November 2014. The MCAA is based on Article 6 of the Multilateral Agreement on Mutual Assistance in Tax Matters (administrative assistance convention) and provides for the exchange of information collected under the rules of the common reporting and due diligence standard for financial account information (Common Reporting Standard; CRS) developed by the OECD as part of the AEOI standard. The CRS sets out who has to collect which information on which accounts. In Switzerland it is an annex to and a component of the MCAA. The MCAA and CRS contain the substantive legal basis for the AEOI between Switzerland and its partner states. However, not all provisions are sufficiently detailed, justiciable and directly applicable, which is why the Federal Act on the International Automatic Exchange of Information in Tax Matters (AEOI Act) and the associated Ordinance on the International Automatic Exchange of Information in Tax Matters (AEOI Ordinance) were adopted. The Administrative Assistance Convention and the MCAA entered into force together with AEOI Act and AEOI Ordinance on 1 January 2017. This created the legal basis for the AEOI, on the basis of which the first data exchange between Switzerland and its partner states took place in autumn 2018.

On 5 October 2015, as part of the Base Erosion and Profit Shifting (BEPS) project, the OECD published a report on transfer pricing documentation and country reporting (report on Action 13). The report provides for the implementation of automatic country-by-country reporting (CbCR) by multinational companies. It is a minimum standard that all OECD and G20 countries have committed themselves to implementing. Country-by-Country reports provide information on the global allocation of turnover and taxes paid, other key figures of multinational companies in individual countries and territories together with information on the principal economic activities of all constituent legal entities of a multinational group. Group parent companies of multinational groups domiciled in Switzerland, whose turnover exceeds CHF 900 million, are required to prepare a Country-by-Country report and submit it to the FTA. The legal basis for the implementation of the automatic exchange of Country-by-Country reports came into force in Switzerland on 1 December 2017. The obligation to submit a Country-by-Country report applies for the first time to financial years beginning on or after 1 January 2018. The first regular exchange will take place in 2020. At the request of the respective companies, the voluntary exchange for the 2016 and/or 2017 tax periods took place in 2018 and in 2019.

In addition, Switzerland provides administrative assistance in the field of indirect taxes under the Cooperation Agreement between the Swiss Confederation, of the one part, and the European Community and its Member States, of the other part, to combat fraud and any other illegal activity to the detriment of their financial interests.

Mutual assistance

Switzerland grants mutual assistance in the area of both direct and indirect taxes. As the legal basis is not identical for the two areas, the prerequisites are not always the same.

The Federal Act on International Mutual Assistance in Criminal Matters (IMAC) is applicable in principle. In this regard, the act referred to in the foreign request must be a criminal offence in both countries (double criminality). Moreover, tax or duty fraud must exist. The constituent elements of tax or duty fraud in accordance with the IMAC are deemed to exist if the perpetrator gives false information or remains silent on something incorrect and thus achieves a favourable assessment, thereby fraudulently and unlawfully depriving the community of a substantial amount of tax or duty, contributions or other payments, or otherwise diminishing the assets of the community.

The foreign requesting authority does not have to prove the alleged action, but it does have to present the corresponding facts in such a way that they are sufficiently credible for the requested authority. It thus has to portray the deed in such a way that the causes for suspicion put forward are immediately recognisable and understandable.

In the area of indirect taxes and customs duties, mutual assistance can also be based on the Cooperation Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other part, to combat fraud and any other illegal activity to the detriment of their financial interests. The Convention implementing the Schengen Agreement can additionally serve as a basis. Tax evasion is sufficient in order for mutual assistance to be provided in the area of this agreement. Tax evasion exists if taxes cannot be determined in part or in full, or not on time, because the taxpayer has intentionally failed to fulfil his or her obligations towards the tax authority. A request in accordance with these agreements is subject to less stringent requirements. The tax evasion merely has to be traceable in order for mutual assistance to be granted.