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Automatic exchange of information (AEOI)

February 17, 2020| Legal News

Automatic exchange of information (AEOI)

Compliance with the global standard for automatic exchange of information on financial accounts (AEOI) is designed to increase transparency in the field of taxation and prevent attempts to evade taxes by withdrawing funds abroad. More than 100 states, including Switzerland, accepted obligations to comply with the standard. AEOI does not affect the privacy of domestic customers of Swiss banks.

The principles of the AEOI began to operate on January 1, 2017. Parliament agreed to introduce a standard concerning 107 states. On January 1, 2020, Switzerland activated AEOI with 97 partner countries. Collaboration has been established with all EU and EFTA member states, almost all G20 countries and all OECD countries, Switzerland's most important economic partners and leading world financial centers. According to the data as of the end of September 2019, 75 partner countries have successfully exchanged data on financial accounts. How agreements will be concluded with other states in this area depends on:

• adoption of relevant obligations by other countries;

• implementation of the Global Forum Action Plan for the participation of developing countries in the AEOI.

The Global Forum on Transparency and Exchange of Information in the Field of Taxation conducts expert reviews that contribute to the domestic implementation of the AEOI standard. The goal is to ensure equal conditions for all players in the world. As with sharing information on demand, the Global Forum uses expert reviews to examine how the internal implementation of the AEOI standard goes.

To achieve a holistic approach to compliance with the AEOI standard, preliminary checks of all of its key elements are carried out in stages. They relate to the national legal framework of the AEOI. A preliminary review of national legal acts led the Global Forum to recommend Switzerland to amend federal law and regulation on the international automatic exchange of information on tax issues. Proposed amendments relate to:

• certain obligations of due diligence and registration;
• inclusion of document storage obligations for financial institutions;
• definitions;
• removing or adapting some exceptions.

On November 20, 2019, the Federal Council issued an order to amend the AEOI Act. The consideration of the bill in parliament will occur throughout 2020. It is expected that the amendments will enter into force on January 1, 2021.
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.

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