Federal Council removes transitional provision from Ordinance on International Automatic Exchange of Information in Tax Matters
During its meeting on 7 November 2018, the Federal Council decided to remove the transitional provision concerning the term “participating state” in the Ordinance on the International Automatic Exchange of Information in Tax Matters with effect from 1 January 2019, thereby implementing an international requirement.
According to the definition of the standard on the automatic exchange of information (AEOI), a participating state is a state with which an AEOI agreement exists. Financial institutions have enhanced due diligence requirements vis-à-vis non-participating states.
When the Organisation for Economic Co-operation and Development (OECD) introduced the AEOI, it decided that states could include a transitional provision in their national law according to which participating states are also deemed to be states that have undertaken to implement the AEOI. The reason for this is that the AEOI will not be introduced by all states at the same time; instead, the AEOI agreement network will be gradually expanded. The transitional provision was intended to reduce the financial institutions’ burden during the introductory phase of the AEOI. Switzerland made use of this in the ordinance (Article 1).
More than 100 states and territories, including Switzerland, have since introduced the AEOI and expanded their agreement network. Against this backdrop, the OECD called on the states in autumn 2017 to remove the transitional provision.
The Federal Council is implementing this international requirement with today’s decision, thereby ensuring that the global AEOI standard is implemented correctly. The Swiss agreement network currently comprises more than 75 AEOI partner states. The removal of this transitional provision should have only a minor impact on practical AEOI implementation by Swiss financial institutions.
Press release of the Swiss Federal Government of 7 November 2018 – www.admin.ch