The Free Flow Of Data

Author:Mr Ralph Butz and Michaela Lemke
Profession:Prager Dreifuss

Switzerland is on its way towards the Automatic Exchange of Information (AEOI). The AEOI will lead to the transmission of sets of data from a reporting financial institution (e.g. a bank) to the domestic tax authority. The domestic tax authority will have to exchange such data with the respective foreign tax authorities of participating countries, with which respective agreements have been made. The procedure itself is in accordance with the OECD Common Reporting Standard (CRS).

Switzerland is a major financial service centre and is therefore particularly affected by the challenges the AEOI creates. At present, the Swiss legislator is in the approval process of several agreements and collateral/accompanying legal acts in connection with the AEOI and the CRS.

Legislation process

On 15 October 2013, Switzerland signed the OECD/ Council of Europe Convention on Mutual Administrative Assistance in Tax Matters (the entering into force is envisaged for 1 January 2017). According to the convention, there are three possible ways of exchanging information: on request; spontaneously; and automatically. For the implementation of this convention in Switzerland, specific amendments have to be made with regard to the Federal Tax Administrative Assistance Act. Switzerland is also on its way to approving the Multilateral Competent Authority Agreement (MCAA), which also includes the CRS, and implementing a Federal Act on the International Automatic Exchange of Information in Tax Matters. The consultation process for all these acts has finished.

The Committee for Economic Affairs and Taxation of the Swiss National Council (WAK-NR) has already discussed the drafts and has issued a recommendation to approve the OECD/Council of Europe Convention and the respective amendments. With regard to the drafts of the MCAA and the Federal Act on AEOI, the WAK-NR suggests several amendments, such as the possibility to appeal to a court against the decision to exchange data, if such an exchange of data could lead to disadvantages for the reporting person that are not held reasonable due to lack of rule of law-based guarantees.

In the same context, the WAK-NR requires the Federal Council to carefully examine the standards of data protection in possible participating countries as well as the opportunities for regularisation.

The Federal Council made suggestions with regard to the Anti-Money Laundering Act (AMLA) concerning new risk-based duties for financial intermediaries of...

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