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Switzerland Makes Further Advances On Tax Cooperation

by Ulrika Lomas, Tax-News.com, Brussels

14 October 2013


Taking further measures to implement its financial market policy in the area of taxation, the Federal Council has approved the signing of the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters, and has adopted a draft mandate for negotiations on the revision of the savings tax agreement with the European Union (EU).

Switzerland has been committed to complying with international standards in tax matters since March 2009. The signing of the OECD/Council of Europe Convention underscores Switzerland's willingness to conform to these standards. It also confirms Switzerland's commitment to the global fight against tax fraud and tax evasion with a view to safeguarding the integrity and reputation of the country's financial center.

Over 50 countries have signed the convention to date, and it is already in force in approximately 30 countries. The multilateral treaty provides a framework for tax cooperation between states. Its modular system provides for multiple forms of cooperation in the area of taxation, including the exchange of information upon request and spontaneously. The automatic exchange of information is also one of the options foreseen in the convention, although this type of assistance expressly requires an additional agreement between the states involved.

Following the signing of the accord, the convention will be subject to the standard approval process in Switzerland, commencing with a consultation for interested parties. The Federal Department of Finance (FDF) will be tasked with presenting a consultation draft. The Swiss Federal Council will subsequently dispatch the text to parliament for approval, and the convention will then be subject to an option referendum.

In addition, the Federal Council has adopted a draft mandate for negotiations regarding a revision of the taxation of savings agreement concluded between Switzerland and the EU. This decision follows the mandate adopted by the Economic and Financial Affairs Council (Ecofin) on May 14, 2013, enabling the European Commission to negotiate an amendment of the taxation of savings agreements concluded with Switzerland and third countries. The EU's aim is to ensure that these agreements are in line with the planned revision of the European Union Savings Tax Directive.

Switzerland has been willing to discuss a revision of the agreement, with a view to eliminating existing loopholes, since 2009. However, the Confederation insists that an amendment of the agreement should only be agreed provided that a satisfactory solution is found with respect to how the regulation of third country regimes is structured for the provision of cross-border financial services, within the framework of the Markets in Financial Instruments Directive and Regulation (MiFID).

The draft mandate, prepared by the FDF in collaboration with the Federal Department of Foreign Affairs (FDFA), will be submitted for consultation to the competent parliamentary committees and to the cantons in Switzerland. Afterwards, the Federal Council will then adopt the definitive mandate, whereupon Switzerland will be able to commence negotiations with the EU. The content of the mandate remains confidential.

A spokesman for EU Tax Commissioner Algirdas Šemeta has already made clear that the Commission is eager to swiftly engage in "open and ambitious" negotiations with Switzerland, once the Confederation has obtained its negotiating mandate. The automatic exchange of information will remain a priority during the savings tax talks.

TAGS: compliance | Finance | tax | European Commission | tax compliance | tax avoidance | interest | Organisation for Economic Co-operation and Development (OECD) | agreements | Switzerland | standards | regulation | mutual assistance agreement | individual income tax | European Union (EU) | services | Europe | Tax | Tax Evasion

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