Wednesday, July 6, 2011

Reports That the Swiss are Relaxing Tax Information Sharing Rules (7/6/11)

There are reports that the Swiss Government in moving / inching toward real exchange of information under its double tax treaties, which are (like the most U.S. tax treaties, based on the OECD Model Treaty). See Swiss Government Adopts OECD Standards On Bank Secrecy, Tax Offenses, Nasdaq (7/6/11) which reports in part as follows:

ZURICH -(Dow Jones)- The Swiss government Wednesday adopted standards on banking secrecy laid out by the Organization for Economic Cooperation and Development, or OECD, which will allow foreign authorities to pursue citizens suspected of using hidden Swiss accounts for tax evasion, and no longer only for outright tax fraud.  

* * * *

- In spring 2009, the Federal Council took the decision to adopt in future the international standards set out in Article 26 of the OECD Model Convention with respect to administrative assistance in tax matters. According to this, international administrative assistance should be possible not only in the case of tax fraud but also in the case of tax evasion and for tax assessment. The implementation of this decision requires appropriate wording in the double taxation agreements, or DTAs, with other countries. Up to now, over thirty DTAs have been adapted or renegotiated. Execution of administrative assistance must ensue under national law. To this end, the Tax Administrative Assistance Act is to be introduced.

- The Act contains the principle that administrative assistance will only be provided upon request in individual cases. No administrative assistance will be provided by Switzerland if a request is based on information which was acquired by acts which are punishable under Swiss law. Information transmitted abroad is only allowed to be used to enforce Swiss tax law, in so far as it could have been obtained in accordance with Swiss law.
I will add more specific information as I learn of it.  Whether this move is real remains to be seen.

It would appear that John Doe Treaty requests will not be allowed under this description.  However, I suspect that that too may be honored in the breach, although the only instance of a John.Doe treaty request to Switzerland that I am aware of appears to be request arising out of the UBS fiasco which the Swiss would like present and potential furture clients to believe will never happen again.

There is also a perhaps related report that some Swiss banks are blocking access to accounts related to other country potential tax evasion.  Elena Logutenkova, Some Swiss Banks Are Blocking Access to Offshore Accounts Over Tax Deals, Bloomberg (7/6/11).  The report says:

Some Swiss banks are blocking clients from gaining full access to offshore accounts in connection with tax treaties being negotiated between Switzerland and Germany, the U.K. and the U.S., the Swiss banking ombudsman said.

1 comment:

  1. No suprise here! The banks will do whatever they have to in order to minimize damage to themselves. The Swiss government will do the same. UBS was a classic example. I imagine many will not comply by participating in OVDI. The big question is what will happen to folks after OVDI expires? How harsh will IRS get? Is a one year 50% Fbar penalty and little to no incarceration the max? Will there be an OVD3? Going through the IRS programs sucks. I think it is the best option in the end if you have unreported offshore income and unfiled Fbars.



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