Switzerland has not traditionally agreed to the exchange of
information (EOI) with other countries regarding tax matters.
Until 2009, there were only a few exceptions to that policy,
and they were typically included in bilateral treaties. These
included the EOI for the correct application of tax treaties,
the EOI in situations such as tax fraud, and with certain
countries such as the US and Germany.
However, since 2009, Switzerland has started to change its
policy by accepting a much broader EOI in tax matters. First,
it accepted to exchange information regarding the correct
application of the internal laws of a particular country. To
that end, it accepted to update many tax treaties to include an
EOI provision following the OECD model.
Switzerland has also agreed to participate in the automatic
exchange of information (AEOI), as per the OECD's common
reporting standard (CRS), and to exchange information in
certain situations regarding tax rulings it has issued around
certain countries. The latter follows the recommendations
contained in Action 4 of the BEPS Action Plan.
Exchange of information upon request, AEOI, and certain
exchanges regarding tax rulings are now all in force in
Switzerland. Given that these are all new areas in Switzerland,
EOI practices have been developing at a very rapid pace.
Exchange of information requests
Every year, Switzerland receives an unprecedented number of
information exchange requests relating to both individuals and
corporations. Requests regarding individuals typically relate
to cases where the requesting country suspects that a resident
maintains an undisclosed Swiss bank account.
Requests aimed at corporations typically relate to transfer
pricing (TP) disputes, with the requesting country generally
seeking information on the Swiss entity of the group: its
substance, functions, and tax regime, among others.
As per Swiss legislation, a targeted person benefits from
important procedural rights such as the right to review the
file (including the request for information), the right to
comment and correct the information to be exchanged, and the
right to appeal against a decision to exchange, among
Swiss courts have subsequently been handling many appeals
lodged by persons targeted by EOI requests. That particular
area of law has been very dynamic in recent years. In
particular, there are a number of interesting developments
regarding group requests, credit cards, and tax returns, which
are discussed below.
Requests for EOI are typically aimed towards individual
cases. Historically, the US has successfully lodged group
requests in tax fraud cases. Such group requests describe
patterns of behaviour that corresponded to tax fraud.
Switzerland would exchange information on all individuals for
which such a pattern could be evidenced.
In the past, the Netherlands has lodged group requests on
all Dutch residents holding bank accounts with certain Swiss
banks (UBS, Credit Suisse, etc.), unless those individuals had
provided to the bank documentary evidence that they were
properly reporting their bank account information to the
The Swiss Supreme Court ruled that this group request was
acceptable and did not correspond to a fishing expedition,
which would otherwise not be permissible.
Several countries such as France, Spain, Italy and Austria,
among others, also lodged requests aimed at unidentified groups
of persons holding bank accounts at UBS. These requests have
been based on information obtained by Germany, who later shared
this information with other countries. The information consists
of a list of accounts identified by numbers with a specific
classification code determining the country of residence of the
account holder (or ultimate beneficial owner).
The countries lodging requests based on that information
argued that the mere possession of a bank account in
Switzerland constitutes sufficient suspicion of non-compliance.
In the first instance, the Swiss Supreme Court recently ruled
that such a request constituted a fishing expedition, and was
thus not permissible. The case is pending in front of the
Certain countries also conducted local investigations to
determine whether credit or debit cards were being used.
Indeed, should an individual regularly use a credit or debit
card linked to an account outside of their country, this could
show that the person is resident in one country and maintains
an undisclosed bank account in another, or that they are not
registered as a resident of the country (but would qualify as
such based on the number of days of presence), for
Certain countries have thus lodged requests aimed at
unidentified persons. The only identification available was the
credit or debit card number. These requests sought to identify
the person using the credit or debit card. Swiss courts ruled
that these requests were acceptable (i.e. the identification
through a credit card number was sufficient and that the
suspicion of non-compliance was sufficiently established
through the number of transactions.
Tax returns, tax amount and tax rulings
With respect to requests for EOI aimed at groups of
companies, foreign countries have been asking for very detailed
information, notably including copies of tax returns of the
Swiss companies, information on the exact tax amount paid in
Switzerland, and copies of the tax rulings possibly secured in
Until recently, it was the practice of Swiss tax
administrations to refuse providing copies of tax returns. Tax
returns were considered internal documents that were not likely
to be relevant for foreign countries. Furthermore, Swiss tax
authorities typically refused to provide full copies of tax
rulings and were simply summarising the content of these
However, Swiss tax authorities have since changed their
practice and now provide full copies of tax returns, tax
rulings, and details on the exact amount of taxes settled by
the Swiss company of the group.
Swiss courts have ruled that the requesting country (France,
in this particular case) had successfully shown that the amount
of tax settled was likely to be relevant in France, and thus
allowed the provision of that information.
It is expected that Swiss courts will also consider it
acceptable to provide full copies of tax returns and full
copies of tax rulings.
Automatic exchange of information
The OECD developed the standard for automatic exchange of
financial account information in tax matters (standard), which
aims to prevent individuals and entities from evading tax
through the use of financial accounts and investment vehicles
outside their jurisdiction of tax residence. It is commonly
known as the CRS.
According to the standard, a financial institution is
required to collect information on its account holders and
report certain information to its local authority. The local
tax authority then automatically exchanges that information
with the tax authority where the account holder is a tax
resident (on an annual basis).
In 2013, the Swiss Federal Council declared that it would
contribute actively in the development of the CRS. Switzerland
therefore introduced legal and statutory frameworks to
implement the CRS in Swiss law. In October 2013, Switzerland
adopted the Multilateral Convention on Mutual Administrative
Assistance in Tax Matters (CMAAT), and on December 18 2015
implemented the Multilateral Competent Authority Agreement
(MCAA) along with the Swiss Automatic Exchange of Information
Act (AEOI Act). In 2016, the Swiss Automatic Exchange of
Information Ordinance (AEOI Ordinance) was adopted. All the
above entered into force on January 1 2017.
Common reporting standard
Switzerland has agreed to implement the CRS with several
countries, and with all European countries. It developed
detailed guidance on its implementation in Switzerland, and
exchanged information in 2018 for the first time with countries
with which it had agreed to implement the standard (it provided
information relating to calendar year 2017). This related to
approximately 2 million accounts.
Switzerland continues to agree to implement the standard
with more and more countries. The standard is thus in force for
many other countries as of January 1 2018, and with even more
countries as of January 1 2019. Expansion of the list
continues, with the standard expected to be effective with more
countries from January 1 2020.
With respect to the inbound transfer of information
(Switzerland receiving automatically information from foreign
countries), the Swiss authorities have published guidance
relating to the internal voluntary disclosure regime. Swiss
legislation contains provisions pursuant to which a Swiss
resident announcing spontaneously undisclosed items of income
and wealth would not suffer penalties.
The core requirement is that the announcement be
spontaneous. For instance, the authorities must not already
have the information available to them. Swiss authorities
indicated that any announcement of income and assets subject to
the AEOI would no longer be considered as spontaneous as of
September of the year when Switzerland is to receive the said
information. This triggered an unprecedented number of
spontaneous announcements by Swiss residents.
Spontaneous exchange of information
In order to comply with Action 5 of the OECD's BEPS
initiative, Switzerland has since decided to spontaneously
exchange information on Swiss tax rulings with countries for
which that information was likely relevant.
In order to implement this exchange, Switzerland relied on
section 7 of the CMAAT, which is a broad provision on
spontaneous exchange of information. Switzerland subsequently
exchanges information with all countries that are members of
Historically, Switzerland started to exchange information
relating to tax rulings in 2018. As a result, it started
collecting information in 2017. In case the taxpayers did not
want information to be exchanged, they had the possibility to
withdraw the rulings. Many Swiss companies subsequently decided
to withdraw rulings that were in force. This did not
necessarily change the tax regime applicable to them.
However, instead of having the benefit of a signed and
approved ruling, they now simply take a position in the tax
return. The main disadvantage of this is the absence of
certainty to effectively obtain the tax treatment sought in the
Exchange of information outlook
Switzerland's practice in exchanging information regarding
tax matters has been developing at an incredibly fast pace in
recent years. This is very likely to continue in the coming
years. Conversely, it is very likely that the number of tax
authority officers dedicated to these questions will continue
to rise. In turn, so too will the number of court cases.
As a general trend, Swiss courts and tax authorities
typically rule in favour of a broad EOI. Certain types of EOI
in tax matters were initially thought to be rather narrow in
their scope of application, and have been broadened in the
practice of the tax authorities, which are often vetted by the
Lenz & Staehelin
Tel: +41 58 450 70 00
Fax: +41 58 450 70 01
Jean-Blaise Eckert is considered a leading lawyer in
tax and private client matters in Switzerland. He is
the co-head of Lenz & Staehelin's tax group, where
he advises a number of multinational companies and
high-net-worth individuals. He is a frequent speaker at
professional conferences on tax matters, is the
secretary general of the executive committee of the
International Fiscal Association (IFA), and sits on the
board of several public and private companies,
including Compagnie Financière Richemont and PSA
Admitted to the bars of Neuchâtel and Geneva,
Jean-Blaise Eckert holds an MBA (Berkeley, 1991), a
diploma as a certified tax expert (1994), and a diploma
as a certified specialist (SBA) in inheritance law
Lenz & Staehelin
Tel: +41 58 450 70 00
Fax: +41 58 450 70 01
Frédéric Neukomm is a partner in the
Geneva office of Lenz & Staehelin. His main areas
of work are company tax law and tax law for
high-net-worth individuals. He also works in the fields
of banking and finance. He is a frequent speaker at
professional conferences and has written a number of
scientific publications on tax law issues.
Admitted to the bar of Geneva (2005),
Frédéric Neukomm holds an MBA
(Georgetown, 2003) and a diploma as a certified tax