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Switzerland Agrees Next Steps For Tax Compliance

by Ulrika Lomas, Tax-News.com, Brussels

05 December 2013


The Swiss Federal Council has approved the next steps for enhanced due diligence requirements, to prevent the acceptance of untaxed assets in the Confederation.

According to the Swiss Federal Department of Finance (FDF), the Swiss Federal Council has resolved that banks and other financial intermediaries in Switzerland will have to comply with enhanced due diligence requirements when accepting assets, in order to prevent the inflow of untaxed assets.

Based on this resolution, "the new requirements are to be discussed in coordination with the conclusion of possible agreements on the automatic exchange of information between Switzerland and its main partner countries," the FDF explained.

The FDF said: "The extended due diligence requirements are the result of the Federal Council's financial market strategy and serve to ensure a tax-compliant financial center. They are to supplement the existing due diligence requirements to prevent money laundering."

The FDF added: "The Federal Council reckons that an internationally recognized standard for the automatic exchange of information (AEI) will exist in the foreseeable future, which would enable Switzerland to conclude the agreements necessary for implementation with important partner states. Enhanced due diligence requirements should apply additionally for those states with which no such agreement exists. This procedure makes it possible to coordinate these requirements with the implementation of an AEI."

The Federal Council has instructed the FDF to submit a proposal on the structure of the extended due diligence requirements, when agreements on an AEI in accordance with the international standard can be concluded with the main partner states, or if it has been established that no AEI agreement can be concluded in the foreseeable future

Furthermore, the Swiss Federal Council has authorized the first banks to cooperate with the US authorities within the framework of the US program to resolve their tax dispute. It encouraged the Swiss banks to give serious consideration to their participation in the program, and to make their decisions in this regard in a timely manner.

Client data is not covered by this authorization. The authorization states that banks must comply with applicable Swiss law, particularly data protection and employment law provisions, within the framework of their cooperation with the US authorities.

Information on the number and identity of the banks in question is confidential and will not be communicated.

On August 29, 2013, Switzerland and the US signed a joint statement to resolve the longstanding tax dispute between Swiss banks and the United States. In this, the US makes provision for offering a unilateral US program to settle the dispute, while Switzerland intends to enable affected banks to participate in the program voluntarily and strongly encourage them to give it consideration.

All banks, which were not the target of a criminal investigation by the US by August 29, 2013, are entitled to participate. Banks that have to assume they have violated US law have until December 31, 2013, at the latest, to notify the US authorities that they wish to participate in the US program in the so-called "category 2."

In order to be able to participate in the US program, Swiss banks have to ask the Federal Council for authorization in accordance with Article 271 of the Swiss Criminal Code.

TAGS: compliance | Finance | tax | tax compliance | tax avoidance | law | Organisation for Economic Co-operation and Development (OECD) | agreements | Switzerland | United States | individual income tax | Tax | Tax Evasion

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