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Within the last six months, Switzerland has signed twelve DTAs. Some of these revisions in the interest of the national economy went far beyond the amendment of clauses on administrative assistance in tax matters. Switzerland not only negotiated the amendment of administrative assistance in tax matters, but also obtained numerous advantages for business. These include zero rates, arbitration board clauses and the elimination of existing discrimination due to earlier policy on administrative assistance. The Swiss authorities have swiftly implemented the Federal Council’s instructions of 13 March to take up negotiations on the revision of DTAs in accordance with the OECD Model Convention. In return, Switzerland will be removed from the ‘grey list’ of the OECD Secretariat.
Switzerland fulfils the international standards regarding administrative assistance in tax matters. It will conclude further agreements in accordance with the OECD Model Convention. Within the OECD, Switzerland will work towards establishing an efficient monitoring system to ensure worldwide compliance with the international standards. For the first time, Switzerland is now represented in the Bureau of the Committee on Fiscal Affairs and in the Bureau of the Global Forum on Taxation. That way, it can be involved directly, formally and in a timely manner in the discussions and proposals of the Committee on Fiscal Affairs.
Twelve DTAs signed
The OECD Secretariat placed Switzerland on a list of countries which comply with the OECD standards, but which, in its view, do not implement them in substance. The list was adapted by the G-20 states at their summit in London and subsequently published by the OECD on 2 April 2009. Despite being a founding member of the OECD, it was not notified of the production of the list. The Federal Council therefore protested to the OECD.
The Federal Council had taken note of the criticism and threats made towards Switzerland by various states in connection with the issue of the exchange of information in tax matters and rejected them as unjustified even before 2 April. Switzerland is not a tax haven. This was also repeatedly affirmed by the OECD. Switzerland has a well functioning tax system and levies the usual taxes while striving to set these at a competitive level. On 13 March 2009, the Federal Council decided that Switzerland would adopt the OECD standard in international administrative assistance in tax matters in accordance with Art. 26 of the OECD Model Convention and extend the exchange of information in individual cases to specific and justified requests with other countries. The Federal Council withdrew its reservations regarding the OECD Model Convention and took up negotiations on the revision of double taxation agreements, particularly with OECD member states.
Since the decision of 13 March 2009, Switzerland has signed a DTA containing an extended administrative assistance clause in accordance with Art. 26 of the OECD Model Convention with Denmark, Luxembourg, France, Norway, Austria, the UK, Mexico, Finland, the Faroe Islands, the USA and Qatar. The agreement with Spain is also considered to have been signed. The DTA with Spain contains an automatic most-favoured nation clause which is activated if Switzerland agrees a further reaching provision with another EU state. This clause was activated with the signing of the DTA with Denmark on 21 August 2009.
Banking secrecy remains in place at home
The adoption of the OECD standard on international administrative assistance in tax matters in accordance with Art. 26 of the OECD Model Convention has no effect on taxable persons resident in Switzerland. The privacy of domestic and foreign bank clients (banking secrecy) in terms of unjustified intrusion by the State remains intact. The possibilities available to Swiss tax authorities to access bank data under national law are not affected by this decision. However, banking secrecy offers no protection in the case of tax offences. As a result of the globalisation of financial markets and particularly against the backdrop of the financial crisis, international cooperation in the area of taxes has grown in importance. The Federal Council will continue to support efforts in this regard.