The automatic exchange of information (AEOI) will come into effect in Switzerland on 1 January 2017. Information will be gathered from that date and is expected to be exchanged with EU member States and Australia1 for the first time in 2018. Experts are predicting that this exchange of information will bring about a wave of voluntary disclosures.
Here are the facts
The exchange of tax data as from 2018 will allow foreign tax authorities to make a comparison between the data contained in AEOI and the information given by taxpayers in their tax return. If comparing the data shows up differences then the local tax authorities will investigate further. In the terms of the applicable double taxation agreements (DTA) data may be requested from the partner state in the course of routine requests for administrative assistance relating to periods of time subsequent to the entry into force or signing of the DTA. A number of agreements came into force in the period from 2011 to 2014.
Data is to be exchanged and reconciled. Historical data can be requested through retroactive clauses. Taxpayers who are affected but to date have not complied would then be encouraged to put this situation right before the start of AEOI by making if possible a voluntary self-disclosure. For Switzerland, experts estimate that, since 2010, only a few people have made use of the voluntary self-disclosure regime. The number of self-declarations in current AEOI participating States should therefore significantly increase!
Given the aforementioned facts, a likely scenario is that self-declarations will cover a number of previous years! The question here is whether the affected taxpayers will be able to obtain the necessary tax reports from their financial institution in order to rectify their situation. Will the financial institution be willing and technically in a position to deliver historical and/or current data on the basis of the applicable tax law in the customer’s jurisdiction?
The separation of tax-related data – now for the future
The effort to gather historical tax information for a self-declaration must not be overlooked and justifies a service such as TaxLevel! If historical data needs to be processed then this should not be a one-off task without any application for the future. Historical data is valuable and should be updated without any gaps. It then can also be used for the preparation of tax reports for current and future years.
An intelligent technical solution – coupled with the right tax know-how
TaxLevel is the right service whether for a single self-declaration or the preparation of current tax reports. The tax report-focused architecture and the flexibility of the TaxLevel solution together with its web-based task processing all adds up to an efficient service focussed on customer needs. Cooperation with selected tax experts provides a legal review of the results where needed.
1. A current overview of the AEOI partner states, including the state of the parliamentary debate, can be found on the website of the State Secretariat for International Financial Matters (SIF).