Automatic exchange of information (AEOI)
Status as at February 2019
Tax transparency should be improved and cross-border tax evasion thus prevented with the help of the global standard for the automatic exchange of financial account information (AEOI). The necessary legal foundations had to be created in Switzerland in order to enable the AEOI to be implemented. These entered into force on 1 January 2017. Switzerland exchanged account data with the first partner states for the first time in autumn 2018.
Combating tax evasion
As a result of the financial and debt crisis, combating tax evasion worldwide has become a priority issue which is broadly pursued by the global community. In July 2014, the OECD Council adopted the global standard for the international automatic exchange of information in tax matters. During the plenary meeting of the Global Forum in October 2014, almost 100 countries committed themselves to introducing this global standard. 49 states and territories exchanged account information for the first time in September 2017. 53 other states and territories, including Switzerland, followed in autumn 2018. Domestic bank client confidentiality in Switzerland is not affected by the AEOI.
The global standard
Switzerland actively participated in the preparation of the global standard. It was important for the Federal Council that the standard satisfied exacting requirements in terms of compliance with data protection and the principle of speciality. Consequently, data may be used solely for tax purposes. The standard should also guarantee reciprocity and encompass robust regulations for identifying the beneficial owners of all types of legal entity, including trusts and domiciliary companies.
What information will be exchanged?
The standard applies for both natural persons and legal entities. The actual beneficial owners of the account have to be identified in application of the OECD standard and the FATF recommendations. The information to be transmitted includes account and tax identification numbers, as well as the names, addresses and dates of birth of taxpayers abroad with an account in a country other than the country of origin, all types of income and account balances.
Statutory basis and implementation
In order to be able to introduce the AEOI standard, the Federal Assembly adopted the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (administrative assistance convention), the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA) and the Federal Act on the International Automatic Exchange of Information in Tax Matters (AEOI Act) on 18 December 2015. The Ordinance on the International Automatic Exchange of Information in Tax Matters (AEOI Ordinance), which contains the implementing provisions for the AEOI Act, was adopted by the Federal Council on 23 November 2016. The legal basis for the AEOI was thus created and entered into force on 1 January 2017.
To ensure the integrity of the AEOI standard from the outset, its key elements, including the national AEOI legal bases, will be preassessed in a phased process by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum). Within the scope of this preliminary review, the Global Forum made recommendations to Switzerland. On 27 February 2019, the Federal Council initiated the consultation on the amendment of the AEOI Act and AEOI Ordinance. The bill aims to take the necessary measures to implement the recommendations of the Global Forum.
The AEOI can be implemented by means of a bilateral treaty or on the basis of the MCAA. The MCAA is based on the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters. It makes provision for the automatic exchange of information being activated bilaterally.