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Bankers Association issues recommendations regarding tax compliance for cross border business

The Swiss Bankers Association (SBA) takes note of the decision taken by the Swiss Federal Council to completely revise the legislative amendment concerning enhanced due diligence requirements in the area of taxation. The strategic objective of the banks in Switzerland remains, however, unchanged: they have been committed to a tax compliant financial centre for several years and want to acquire and manage only taxed assets. The recommendations defined by the SBA regarding tax compliance for the cross border business are a further measure for the implementation of this strategy. The recommendations aim to prevent the receipt of untaxed assets.

For the Federal Council, an international standard for the automatic exchange of information qualifies as a suitable alternative to a final withholding tax, an approach that was followed up until recent months. The banks have essentially endorsed this direction and repeatedly expressed their public commitment to a strategy of tax compliance for Switzerland’s financial centre. The banks have already put in place a number of measures that will help ensure that the strategic aim of a tax compliant financial centre is achieved.

Risk-based measures

For a credible and rigorous implementation of the strategic goal of tax compliance, the SBA today issued the recommendations in their present form. The SBA expects its members not to accept any assets where they know that these assets are and will remain untaxed. This also applies to cases of cross border clients changing banks within Switzerland. Through increased due diligence and by applying risk-based considerations, the banks are to ensure that clients, in particular those from European countries that offer their taxpayers the means of regularising their situation, do not bring untaxed assets into Switzerland. Where countries offer possibilities for clients to regularise their situation, banks should persuade such clients of the options for regularisation available in their country of tax domicile and help them to select the best solution. Where a client does not go along with the recommendations made by the bank, the bank must decide if the relationship is still acceptable.

The SBA’s recommendations are to bridge the period until a new international standard for the exchange of information comes into effect. In this context, the SBA takes note of the fact that the Federal Council today decided to completely revise the legislative amendment for enhanced due diligence requirements to prevent the acceptance of untaxed assets (taxed assets proposal).

Recommendations sent to the Banks