Switzerland Exchanges Millions of Accounts With +100 Countries

Switzerland Exchanges Millions of Accounts With +100 Countries

In 2023 Switzerland Exchanged Financial Data With +100 Countries

For U.S. tax purposes, FATCA (Foreign Account Tax Compliance Act) is the main tax law that impacts the exchange of information between the United States and foreign countries. More than 110 foreign countries have agreed to provide US taxpayer information involving foreign accounts that they have ownership of or interest in — along with income generated from those accounts. U.S. persons are then required to report this information on Form 8938 in order to avoid substantial fines and penalties. Another international law that does not directly impact the United States, but could have an impact on FATCA is CRS (Common Reporting Standard). Many foreign countries have agreed to exchange information with each other in accordance with this specific law. And, while the United States has not agreed to CRS, there is a crossover and impact between CRS and FATCA — namely, foreign jurisdictions that comply with both laws. Recently, the Swiss Government published an article noting that they have been exchanging information with 104 countries. Therefore, US taxpayers who may have accounts with Switzerland or are required to report under Swiss law may have a multi-country compliance situation to contend with.

Switzerland Reporting Update

As provided by the Swiss Government:

Exchange of Information with 104 countries on Around 3.6 Million Financial Accounts

      • Bern, 09.10.2023 – The Federal Tax Administration (FTA) has exchanged information on financial accounts with 104 countries. The exchange took place within the framework of the global standard on the automatic exchange of information (AEOI).

        • This year, the AEOI involved a total of 104 countries. Kazakhstan, the Maldives and Oman were added to the existing list of 101 countries. With 78 countries, the exchange of information was reciprocal. In the case of 25 countries, Switzerland received information but did not provide any, either because those countries do not yet meet the international requirements on confidentiality and data security (13) or because they chose not to receive data (12).

        • No data was exchanged with Russia this year either.   Currently, around 9,000 reporting financial institutions (banks, trusts, insurers, etc.) are registered with the FTA. These institutions collected the data and transferred it to the FTA. The FTA sent information on around 3.6 million financial accounts to the partner states and received information on around 2.9 financial accounts from them.

        • The FTA cannot provide any information on the amount of financial assets.   Switzerland has committed itself to adopting the global standard for the international automatic exchange of information in tax matters. The legal basis for the implementation of the AEOI in Switzerland came into force on 1 January 2017.   Identification, account and financial information is exchanged, including name, address, country of residence and tax identification number, as well information concerning the reporting financial institution, account balance and capital income.

        • The exchanged information allows the cantonal tax authorities to verify whether taxpayers have correctly declared their financial accounts abroad in their tax returns.   The OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) reviews the implementation of the AEOI.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who are most concerned about international tax and reporting non-compliance and did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure

Contact our firm today for assistance.