The declaration is said to reflect the firm commitment by the Swiss and the governments of the Crown dependencies to the collection and exchange of information in tax matters in accordance with the global AEOI common reporting standard (CRS).
CRS calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
FATCA on steroids
Described as “FATCA on steroids” by Justin Hayes, product manager at international software provider Linedata in June 2015, he said that the agreement will provide a new single global standard for the exchange of tax information and impact investors not previously affected by the US Foreign Account Tax Compliance Act (FATCA).
In 2010, the US enacted FATCA requiring withholding agents to holdback 30% of the gross amount of certain US-connected payments made to foreign financial institutions unless the institution agrees to perform specified due diligence procedures to identify and report information about US persons holding accounts with them to the US tax authorities.
CRS sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.
First exchange in 2018
The first exchange of information between Switzerland and the crown dependencies on a reciprocal basis will occur in 2018.
The declaration signed in London on 15 January 2016 specifies that each jurisdiction is satisfied with the confidentiality rules provided for in the other jurisdiction with regard to tax.
