Swiss and EU sign agreement on automatic information exchange

The European Union and Switzerland signed, on 27 May 2015, a bilateral agreement on the automatic exchange of financial information that commits both parties to collect information on banking accounts starting in 2017 and to exchange this data from 2018. The new agreement is fully in line with the strengthened transparency requirements that EU Member States agreed last year. It is also consistent with the OECD’s Common Reporting Standard (CRS) for the automatic exchange of information

Under the agreement, EU Member States will receive, on an annual basis, the names, addresses, tax identification numbers and dates of birth of their residents with accounts in Switzerland, as well as other financial and account balance information. This information can currently only be accessed upon request

The new agreement will replace the current agreement on the taxation of savings that entered into force in 2005. Under the current agreement, Switzerland is required to remit to the EU countries 75% of the taxes withheld on interest on savings of EU resident individuals. Alternatively, the client can request the bank to report the interest income to the client’s home country tax authority.

The existing withholding tax agreements that Switzerland signed with Austria and the UK and which entered into force on 1 January 2013 will also be terminated. Switzerland intends to agree with Austria and the UK on how to terminate those agreements and to ensure a smooth transition to the new CRS.

Switzerland first committed itself to incorporating the OECD CRS by signing a declaration at the OECD’s annual Ministerial Council meeting in May 2014. Since that time approximately 100 countries, including all major financial centres, have committed to introducing the CRS. It is the intention of Switzerland to reach agreements for the implementation of the CRS with countries outside the EU, including the US. A first agreement has been signed with Australia

The European Commission is currently concluding negotiations for similar agreements with Andorra, Liechtenstein, Monaco and San Marino. It expects that these will be signed before the end of the year.