Switzerland Strengthens Financial Transparency Measures

Switzerland Strengthens Financial Transparency Measures

On 11 November the Federal Council announced the entry into force of an amendment to the Ordinance on the International Automatic Exchange of Information in Tax Matters from 1 January 2021. The amendments follow the recommendations of the Global Forum on transparency and exchange of information for tax purposes.

The main change is related to increased attention to foreign persons investing in Swiss real estate. Starting from 2021, the reporting obligations for the purpose of the automatic exchange will be extended to associations of real estate owners. For these purposes, the due diligence requirements will be amended in relation to foreign owners of immovable property, the information on which will be subject to disclosure.

In addition, the obligation for reporting Swiss financial institutions to retain documents that could be useful for tax purposes or possible future investigations will be explicitly outlined in the law.

Foundations and non-profit organizations, as well as digital currency accounts, remain outside the scope of automatic exchange. The Swiss Federal Tax Administration also reserves the right to deny automatic exchanges to countries where confidentiality and security standards for information transmission are deemed unsatisfactory.

Switzerland has been participating in the automatic exchange of financial account information since 2018 and to the date has undertaken obligations to send information on accounts held by non-residents to 73 jurisdictions.