Which information will be automatically exchanged ?
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 capital income and account balances. The standard covers both natural persons and legal entities. The actual beneficial owners of the account in accordance with the international provisions on combating money laundering (FATF) must be identified.
How is the automatic exchange of information conducted?
Banks, certain collective investment vehicles and certain insurance companies collect financial information on their clients who are resident abroad for tax purposes. Once per year, these financial institutions send the information to their national tax authority, which automatically transmits the information received to the tax authority in the relevant partner country.
What happens with the data that is exchanged?
Client data may be used solely for the agreed purpose, i.e. the correct taxation of taxpayers in this case. However, the standard does not indicate precisely how the national tax authorities are to do this (e.g. spot checks or extensive data reviews). Data protection has to be ensured.
When will Switzerland introduce the AEOI?
Swiss financial institutions will start to collect the account data of taxpayers abroad in 2017. The first exchange of data with a wide range of partner states and territories will take place in 2018.
Does the AEOI agreement with the EU include all member states?
Yes. The AEOI agreement with the EU applies equally to all member states. Specific agreements with individual EU countries are not necessary. Furthermore, the agreement also applies to Gibraltar on the basis of internal EU provisions.
With regard to the automatic exchange of information standard, will the United States get preferential treatment in relation to transparency of financial constructs?
The United States has approved the OECD's AEOI standard. This is based on the US FATCA model, which will continue to exist. Consequently, temporary exceptions will apply for the United States for a given period. For example, US financial institutions do not have to identify the beneficial owners of foreign investment companies that have not concluded an agreement as a Foreign Financial Institution (FFI) with the United States and are located in a country that has not concluded a FATCA agreement with the United States. However, the United States will levy a withholding tax of 30% on the gross amount of all revenue and sales proceeds from US securities.
For how long will the United States be allowed such an arrangement?
Faced with increasing criticism from the international community, the United States announced at the G20 meeting in April 2016 that it would adopt internal measures in the near future to eliminate certain loopholes and make certain constructs in the United States less attractive.
How will Switzerland use data on Swiss taxpayers with accounts abroad that it receives within the scope of the reciprocal exchange of information?
The domestic use of data received from abroad is up to the individual countries. Given that the cantonal or communal tax administrations are responsible for tax assessments in Switzerland, the Federal Tax Administration (FTA) will forward the financial information received from abroad to the competent assessment authorities for the application and enforcement of Swiss tax law.
Does the global standard for the AEOI apply domestically as well?
No. The international standard governs only the international exchange of client data for tax authorities. Transparency within the states will continue to be determined by the states themselves.
Source: DFF/SFI (Switzerland)