Switzerland Loosening Tax Info Exchange Rules

February 16, 2011 International Tax CooperationOffshore BankingTaxation in Switzerland

Square FlagSwitzerland is taking steps to ease the process for overseas governments to request details and information on foreign taxpayers with Swiss bank accounts.

On February 15th the Federal Department of Finance of Switzerland issued an online statement regarding a change in the rules surrounding the granting of assistance to overseas governments in the process of tax evasion investigations. According to the new regulations, Swiss tax authorities will relax the conditions under which they share information regarding foreign taxpayers holding Swiss bank accounts. This move is expected to greatly boost overseas governments’ ability to pursue tax cheats with financial affairs in Switzerland.

Under current rules, Swiss tax authorities would only provide bank details to overseas governments if the requests included the real name and address of the bank account holder, along with the name and address of the bank involved. Investigations would typically be delayed or discounted entirely if only a partial address was known, or even if there is any ambiguity in the name’s spelling. Under the revised regulations, Swiss authorities will now process requests based on bank account numbers, Social Security, and credit card details, along with a series of other forms of identification.

The rule change follows an international peer review of Switzerland’s tax information sharing and transparency standards, facilitated by the Global Forum on Transparency and Exchange of Information for Tax Purposes. The reviews claimed that the country’s administrative assistance measures for tax investigations were too restrictive and had the potential to be a hindrance to the exchange of information.

It is expected that the loosened requirements will increase the number of information requests sent to Switzerland, as the required evidence for information sharing will be greatly lowered. While expecting a greater number of assistance requests, the Swiss Federal Department of Finance maintained that it will not tolerate any “fishing expeditions”, and will only cooperate on individual cases which are based on the exchange of information based upon specific and justified suspicion of illicit activity.

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