The Forum on Transparency and Exchange of Information for Tax Purposes (“Global Forum”) reviewed Switzerland’s compliance with the Automatic Exchange of Information in Tax Matters (“AEoI”) and raised several recommendations for Switzerland. Most of these recommendations have now been implemented by the Swiss Federal Council, and a revised Swiss Federal Act and Ordinance will come into force as of 1 January 2021. The Swiss Federal Tax Administration (“SFTA”) will also issue amended guidance in due course. The announcement and draft ordinance are available here.
Swiss FIs will need to review their account opening procedures for 2021 to ensure they are in line with the new requirements outlined above. The registration of Trustee Documented Trusts is simply a confirmation of the SFTA’s practice as stated in its CRS Guidance.
The denomination of account value thresholds in USD will be relevant for the first time as at 31 December 2021, so Swiss banks should have sufficient time to adjust their systems. It is interesting that the denomination in US Dollar was raised as an issue, even though the US does not participate in the Common Reporting Standards.
The new provisions regarding Swiss condominium owners’ associations and co-ownership associations, as well as accounts exempt in the jurisdiction of the account holder (typically not relied on by Swiss FIs), should have limited impact for Swiss FIs in practice.
The confirmation of the status quo is welcome news for Swiss FI, but it may be revisited in the future depending on the outcome of the ongoing international discussions on the treatment of no-profit and charitable entities as well as capital contribution accounts.