Swiss federal council adopts AEOI dispatch
The Swiss Federal Council has submitted to Parliament dispatches on the implementation of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA), reports Tax News.
Developed by the Organisation for Economic Cooperation and Development (OECD) and the Council for Europe, the Multilateral Convention on Mutual Administrative Assistance in Tax Matters establishes a comprehensive multilateral framework for the exchange of information and assistance in tax collection. Switzerland signed the Convention in October 2013. The dispatch makes provision for three forms of information exchange: upon request, spontaneous, and automatic.
The second proposal submitted to Parliament concerns the MCAA, which was signed by Switzerland in November 2014. The new Federal Act on the International Automatic Exchange of Information in Tax Matters (AEOI Act) contains provisions on the organizational, procedural, judicial, and criminal requirements associated with the MCAA.
A consultation on the two proposals ran from January 14 to April 21, 2015. Parliament will begin its deliberations this autumn. The legal basis for the changes is due to enter into force at the start of 2017, with the first information exchanges expected to take place in 2018. It would still be possible to meet these deadlines if a referendum on the proposals were held, the Federal Council said.
The Council has also referred to Parliament a dispatch on proposed amendments to the Anti-Money Laundering Act. The Council said the introduction of enhanced due diligence requirements for banks and other financial intermediaries should prevent the inflow of untaxed assets to Switzerland.
Financial intermediaries will be required to conduct a risk-based assessment when accepting assets from new clients, to determine whether the assets have been duly taxed. Where a financial intermediary has to assume that the assets are untaxed, it must reject the client.
In the case of existing clients offering new, untaxed assets, the financial intermediary will need to clarify whether the assets already held are tax compliant. The client will have to provide proof of tax compliance within a reasonable period of time. If the client fails to do so, the financial intermediary must terminate the business relationship. The relationship will not be terminated in cases where it is not possible for the client to provide proof without the risk of unreasonable adverse effects.
The new rules will not be applicable to clients whose country of origin has an automatic exchange of financial account information agreement with Switzerland. This includes US clients. The requirements will also not apply to clients who are resident in Switzerland for tax purposes.
