Anti-fraud agreement

Status as at January 2020

Brief summary

In cases of fraud and simple evasion offences in the field of indirect taxes, Switzerland offers the EU and its member states not only mutual assistance, but also administrative assistance. Although not all EU members have ratified the relevant agreement, it has been applied by Switzerland, the EU and a number of member states since January 2009, i.e. ahead of schedule.

Administrative and mutual assistance for offences related to indirect taxes

The anti-fraud agreement is the last agreement of the second series of bilateral negotiations, and it has not yet entered into force. As a mixed agreement, it must be approved and ratified not only by the European Union, but also by each member state. The aim of the agreement is to improve cooperation between Switzerland and the EU and its member states in the area of smuggling. Its objective is to combat fraud and other unlawful acts in the area of indirect taxes (e.g. VAT, mineral oil tax, tobacco duty), subsidies and public procurement. The agreement covers both administrative assistance and mutual assistance provisions. The application of coercive measures in cooperation with the EU is no longer limited to tax and duty fraud, but now also applies in cases of simple tax evasion. Direct taxes are expressly excluded from the scope of the agreement.

For the purpose of combating fraud, Switzerland provides EU authorities, within the framework of administrative assistance, any means of investigation to which it would have recourse if it were acting on its own account, i.e. also coercive measures. These include, for example, house searches, questioning of witnesses, access to bank accounts and seizure of objects and valuables. However, they are subject to the principle of dual criminality, i.e. they are applied only in cases that are punishable under the law of both contracting parties. Moreover, the amount of the offence must exceed EUR 25,000 and a judicial search warrant must exist.

With respect to assets that originate from tax and duty fraud or professional smuggling and are invested or laundered in Switzerland, mutual assistance is granted. However, the Swiss definition of money laundering is not affected by this; it simply aims to initiate cooperation in the event of money laundering covered by the agreement.

Not applicable in the field of direct taxes

The principle of speciality applies. This means that information transmitted abroad within the framework of mutual assistance or administrative assistance may not be used for proceedings regarding direct taxes (e.g. taxes on income and capital), as these are not covered by the agreement.

Early application

Switzerland ratified the agreement on 23 October 2008 and has been applying it since January 2009. For their part, 27 EU member states and the EU Commission have ratified it and some countries are applying the agreement ahead of schedule, in accordance with Article 44 paragraph 3 of the agreement. However, Ireland has not yet done so. Some EU member states believe the ratification process is taking too long and Switzerland stresses that only swift ratification by all EU member states will enable the agreement to be applied effectively and consistently, and will fully meet the objectives pursued by the contracting parties.