Switzerland To Draft Administrative Assistance Act

by Ulrika Lomas, Tax-News.com, Brussels

26 January 2010

It has emerged that the Swiss Federal Council has instructed the Federal Department of Finance (FDF) to draw up an Administrative Assistance Act.

The Federal Council has emphasized the fact that until this act comes into force, an ordinance will regulate the implementation of international administrative assistance in Switzerland, for which the FDF has just begun the consultation procedure.

On March 13, 2009, the Federal Council agreed that Switzerland would in future adopt the standard in accordance with Article 26 of the Organization for Economic Cooperation and Development’s (OECD) Model Convention for administrative assistance in tax matters, providing for an exchange of information in individual cases upon specific request.

Since then, revised or renegotiated double taxation agreements (DTAs) containing the new administrative assistance provisions have been signed with numerous countries.

According to the Swiss Federal Council, the substantive legal requirements for administrative assistance are governed by the individual DTAs. These are binding upon Switzerland and cannot be altered by an ordinance or a law. The Administrative Assistance Ordinance, and later the Administrative Assistance Act, will regulate the implementation of international administrative assistance in Switzerland, it explains.

In the Administrative Assistance Ordinance, it is noted specifically that no administrative assistance can be provided in the case of violation of public policy or the principle of good faith.

The Federal Administration has stated that: “Originally, only an ordinance was envisaged to strengthen legal certainty and uniform practices in international administrative assistance. Legal considerations have now prompted the Federal Council to regulate this topic at the legislative level.”

It adds: “Recently submitted parliamentary requests also pursue a similar goal. Because there is considerable interest in regulations which are swiftly feasible, short-term regulations at ordinance level should establish national implementation of administrative assistance until the Administrative Assistance Act comes into force.”

The preparation of the Administrative Assistance Act will include input from a working group in which the specialist agencies and external experts involved will be represented.

It is expected that the consultation procedure will continue until April 30, 2010, and the Federal Council aims to put the ordinance into force on October 1, 2010.

It has also emerged that the Swiss Federal Council has adopted five further dispatches on DTAs, which are in line with international standards on administrative assistance in tax matters.

The revised DTAs provide numerous benefits for the Swiss economy. A request will be made to parliament to approve the agreements and to then have them subject to optional referendum in order to take account of political concerns.

The Federal Council adopted the dispatches on the revised DTAs with Austria, Luxembourg, Norway and Finland, as well as the dispatch on the new DTA with Qatar. These DTAs contain the agreed extended administrative assistance clause.

The Federal Council adopted the dispatches on the revised DTAs with the USA, Denmark, France, Mexico and the UK in an initial batch on November 27, 2009.

According to the Federal Admininstration: “Double taxation agreements facilitate the activities of the export sector. They promote investment in Switzerland and thereby contribute to prosperity in Switzerland and in the partner countries. Reductions in withholding tax and zero rates for dividends, interest and royalty payments to avoid double taxation, as well as the introduction of arbitration clauses within the scope of mutual agreement procedures, are amongst the negotiated economic benefits of the revised DTAs. In addition, sanctions and fiscal discrimination are avoided.”

It concludes: “The cantons and the business associations concerned have welcomed the completion of the DTAs which have been revised up to now.”

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