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Markus Weber |
Hans Mies |
It was only a little over a month ago when the G20 communicated during the St. Petersburg summit that it fully endorses the OECD efforts to establish a new single global standard for the automatic exchange of information. The new standard should allow for multilateral and bilateral exchange of information for tax purposes. Given the objective of the standard to represent a powerful tool against tax evasion, key for its success is that it is implemented and accepted on a global scale. A pro-active role in accepting, adopting and shaping the mechanism could be in the interest of Switzerland. While in the public (and political) debate in Switzerland concerns are expressed on the implementation of a multilateral automatic exchange of information the question arises as to what extent these concerns are justified and whether a new legal reality has not already to a certain extent forced an automatic exchange of information upon Switzerland.
Switzerland always took a rather conservative approach regarding the exchange of information which can be illustrated by the observations it made in the past to Article 26 of the OECD Model Treaty, whereby the scope of the article was limited to the exchange of information that was necessary for carrying out the provisions of the tax treaty. Over the years, developments in international tax (treaty) law have caused Switzerland to adapt its approach.
In 2009, the Swiss Federal Council announced that in its new tax treaty policy it would apply the standards as laid down in Article 26 without any reservations.
With the closing of the intergovernmental agreement between Switzerland and the US on the Foreign Account Tax Compliance Act (FATCA), the US demonstrates the ability to implement an exchange of information methodology by forcing other jurisdictions to participate in their change in domestic legislation. FATCA's success is now observed by many states with a great deal of interest and is already referred to as the possible new standard in respect to exchange of information.
The question must be and will be openly discussed whether it would be advisable for Switzerland to follow the conclusions of the Summer 2013 Expert Group Report which suggests to work closely together with the OECD on a mutual approach for the adoption of a global standard and in this way to be able to present sustainable alternatives to new isolated initiatives by powerful states on information exchange.
Very soon, the Swiss voters might decide which road the country will take as a political committee announced recently that it will start collecting votes for a referendum against FATCA. It shows that automatic exchange of information is still controversial within Switzerland.
Markus Weber (markweber@deloitte.ch)
Tel: +41 58 279 7527
Hans Mies (hmies@deloitte.ch)
Tel: +41 58 279 7470
Deloitte
