Exchange of Information with Switzerland

Until a few years go, Switzerland did not render administrative assistance to Germany for taxation purposes. Switzerland does however grant administrative assistance in cases of tax fraud since 2002. In that year, a corresponding revised protocol to the double tax treaty was agreed between Switzerland and Germany. Until then, administrative assistance was only granted under the condition, that it pertained to an offence of tax fraud committed on or after 1.1.2004. The offence of tax fraud is subject to more stringent conditions than contributions fraud (under Swiss law), which would suffice for a request for legal assistance. A tax fraud presupposes, that

• forged, falsified or factually untrue documents such as company accounts, balance sheets, profit and loss statements, wage certificates are used
• for the purpose of deceiving the taxation authorities.

Even if tax fraud was the case, Switzerland did until recently not render administrative assistance in respect of bank accounts, as far as the respective person had obtained accountable income unlawfully (untaxed) and then deposited the funds in his Swiss bank account. Switzerland justified it’s view on the law by the lack of causality between the offence and the requested measure under administrative assistance.

This is all history now, because Switzerland has commenced to implement the global standards for the exchange of information.

In June 2013, Switzerland and Germany agreed to apply the so-called comprehensive reporting clause as set out in Art 26 of the double tax treaty Germany/Switzerland in-line with the OECD-standards. This means, that neither Germany nor Switzerland may rely on the banking confidentiality in respect of the mutual exchange of information. The restrictions in Swiss administrative assistance mentioned above no longer apply for taxation matters. Legal assistance (in criminal proceedings) is however still subject to the condition of contributions fraud being perpetrated. It is however expected, that these restrictions in legal assistance will be adjusted to correspond to the regulations for administrative assistance in taxation matters.

Switzerland is also currently implementing the new global standard for the exchange of information (AIA) in Swiss national law. This standard applies to interest income and will have an extensive scope. Switzerland currently (as of September 2015) intends to introduce the necessary national regulations as soon as possible. A legislative consultation process is currently under way and a draft bill is being prepared. First treaties between Switzerland and partnering countries (e.g. Germany) are scheduled to come into force on 1.1.2017. A initial automatic exchange of data is scheduled for no later than September 2018 (for data from 2017). This being the goal, Switzerland and the European Union signed the agreement for the introduction of AIA on 19.3.2015 . The signed treaty formally constitutes an amendment protocol which replaces the existing agreement on the taxation of interest (Switzerland/EU), but retains the existing exemption from withholding tax for cross-border payments of dividends, interest and royalties between affiliated companies.

The Swiss cantons were invited to comment on the AIA-agreement with the EU within the legislative consultation process mentioned above until 17.9.2015. The Swiss Federal Parliament will now present the AIA-agreement including a recommendation to the Federal Councillors for their approval.

The Swiss legislative is currently (autumn 2015) working towards the implementation of the AIA standards in Swiss national law. The Swiss Federal Parliament will submit its recommendations in respect of the AIA-law, of the multilateral agreement with the responsible authorities and of the treaty on administrative assistance by the European Council and the OECD to the Swiss Federal Councillors.