The Swiss Federal Council recently announced a revision of the Swiss AEOI Federal Act and Ordinance.
Following a review conducted by the Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum), the Swiss Federal Council initiated a consultation on a revision of the Swiss Federal Act and Ordinance (referred to below as the “proposed regulations”) on Automatic Exchange of Information in Tax Matters (“AEOI”). The aim of the revision is to implement the recommendations made by the Global Forum. The amendments are currently expected to be effective from 1 January 2021 (there are various transitional rules for each proposed measure). The consultation period lasts until 12 June 2019.
The following provides an overview of the proposed regulatory changes.
Under the proposal, the classification of certain entities for AEOI purposes would be expected to change as follows:
The classification measures appear to be the most significant change in the proposed amended regulations. Associations and foundations newly qualifying as Reporting FIs would have to register with the Swiss Federal tax administration, implement due diligence processes, and report any reportable accounts.
The following accounts are exempt under the existing regulations. In the proposed regulations, exemptions would no longer be available for:
Swiss FIs would be required to review these accounts to determine whether any of those account holders, or their controlling persons, are reportable under AEOI. Additional controls/monitoring may be required with regards to capital contribution accounts.
Under the existing regulations, it is theoretically possible to open a new account without a self-certification, provided the self-certification is obtained within a period of 90 days. Further, it is possible for an FI to accept a self-certification if the only missing information on the form is the TIN.
The proposed regulations would clarify that:
Under the proposed regulations, Swiss FIs would need to review their account opening procedures to determine that they are in line with the amended requirements. Specifically, the documentation required for AEOI purposes would need to be collected upon opening of a new account, and appropriate steps would need to be taken when the documentation cannot be obtained. When an FI has opened new accounts between 1 January 2017 and 31 December 2020 for which a self-certification was accepted without a TIN, the FI would need to make reasonable efforts to obtain those TINs within two years.
The proposed regulations would provide that trustee documented trusts need to be registered on the Swiss tax authorities’ AEOI portal, including “TDT” in their name. The name of the trust, including the suffix “TDT” would also need to be included in the trust’s CRS reporting.
The new provisions would only formalize the already existing common practice in the Swiss market.
Other new provisions in the proposed regulations include:
Swiss FIs will need to review their policies and systems to determine that they are complying with the amended record-retention and currency requirements. The amendments do not apply retroactively.
Read a March 2019 report prepared by the KPMG member firm in Switzerland
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