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The automatic exchange of information

The automatic exchange of information

The Swiss banks will be implementing the automatic exchange of information (AEOI) with countries abroad from 2017 onwards. Read more about it here.

What is AEOI?

AEOI is an international standard that governs how tax authorities in the participating countries exchange data relating to the bank and safekeeping accounts of taxpayers. The goal is to make tax evasion impossible. The member countries of the G20, the OECD and other important financial centres, which total over 100 jurisdictions, have committed to implementing AEOI. The US, which is implementing its own standard (FATCA), is an exception.

This is how AEOI works

With AEOI, information regarding bank and safekeeping accounts is reported by the banks to the domestic tax authorities. These then exchange the information with the tax authorities in their AEOI partner countries. Responsibility for levying the taxes thus lies fully with the tax authorities in the AEOI partner countries. The following informational video provides a detailed explanation of how the process works.

The SBA's efforts in the interests of a practicable AEOI

Switzerland is particularly affected by AEOI because more than a quarter of global assets invested cross-border is managed here. It is therefore important for Switzerland that the AEOI Standard is as practicable and fair as possible. This is why the Swiss government and the banks have advocated strongly in the OECD that the AEOI Standard should comply with the following principles:

  • A single global standard,
  • Observance of the principle of speciality: the information may only be used for the purposes intended in the agreement,
  • Sufficient legal and technical protection of data,
  • Reciprocity: all countries gather and exchange the same information,
  • The same rules apply for all participants regarding the identification of controlling persons, also for trusts and domiciliary companies.

These points are to a large extent reflected in the standard that is now in force. Thanks to our constructive and well-founded suggestions, and thanks to the support of the Swiss authorities, the OECD made allowances in the standard for the Swiss financial industry’s key concerns (particularly in the commentary). Switzerland’s constructive contribution to the development of the standard was expressly acknowledged by the OECD.

We were also closely involved in the process for transposing the standard into Swiss law (please see our statements in the “Our positions” box). Further to this, we worked intensively with the Federal Tax Administration (FTA) on the development of the Swiss AEOI guidelines.

The basis of AEOI

AEOI is a package consisting of four elements contained in the OECD's “Standard for the Automatic Exchange of Financial Account Information” (see below).

The complete standard can be found below or here.

 

In order for the AEOI standard to become applicable in Switzerland, it must be transcribed into national law and other regulations. These are:

  • The AEOI Act (AEOIA) will come into force on 1 January 2017.
  • The AEOI Ordinance (AEOIO), which also came into force on 1.1.2017.
  • The FTA's AEOI guidelines, which provide around 190 pages of detailed information on the implementation of AEOI by financial institutions.
  • The FTA’s technical guidelines, which will contain guidelines on IT standards (in German).

The AEOI Qualification Committee

The AEOI Qualification Committee was established on 1 December 2016. The Committee deals with questions arising from the implementation of the AEOI in Switzerland. Switzerland is not autonomous when it comes to the interpretation of the AEOI; the requirements set out in the global AEOI standard developed by the OECD prevail.

The AEOI Qualification Committee is led by the FTA and the State Secretariat for International Financial Matters SIF. Also involved are the following associations:

  • Swiss Bankers Association
  • Swiss Insurance Association
  • Swiss Funds & Asset Management Association SFAMA
  • SwissHoldings
  • Swiss Association of Asset Managers
  • SIX Group
  • Treuhand Suisse

AEOI and bank-client confidentiality

Switzerland has always followed the international standards for tax matters. This means that it adheres to the standard established by the OECD and has to date provided information on requests to foreign tax authorities concerning the accounts of foreign taxpayers. With AEOI, bank and safekeeping account information is automatically submitted to the tax authorities in the participating countries on an annual basis. Bank-client confidentiality can thus not be abused by foreign customers for the purpose of evading taxes in the country of residence. The information of banking customers remains well protected even with the introduction of AEOI, because the tax authorities are bound to data protection and the principle of speciality (see above). Furthermore, bank-client confidentiality remains preserved as professional confidentiality. This means that Swiss banks must continue to uphold the confidentiality of their customers and their bank and safekeeping accounts. The protection of privacy remains an important matter for the Swiss banks. You can find more information on the protection of privacy here.

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