Switzerland, France Resolve Tax Data Exchange Snag

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By Bryce Baschuk

Switzerland and France have ironed out a snag in their mutual efforts to combat tax evasion, reaching an agreement to clarify the terms of their cross-border exchange of tax information.

The two countries have found answers to outstanding application issues on the exchange of tax data, with “several” emerging recently, Switzerland’s tax authority said in a July 12 online statement. The countries are now in a position to exchange the tax data upon request, it added.

Switzerland is particularly affected by the international exchange of information as it holds more than a quarter of cross-border invested assets, according to the Swiss Banking Association.

Swiss banks, such as UBS Group AG and Credit Suisse Group AG, have been required since the start of this year to provide customer data to French tax authorities as part of a dual-country exchange agreement. However, the Swiss and French tax authorities disagreed over a number of details related to the exchange, including the scope of how France’s government could use the data.

AEOI and Tax Reform

Automatic exchange of information (AEOI) forms the key part of the OECD’s two-year reform of global tax policy to combat tax avoidance. By the end of this year, large multinational companies will have to file their first global tax reports, known as country-by-country reporting, to the tax authority in which they are headquartered.

Once the relevant tax authorities receive a company’s report, they will share them with their counterparts in the other jurisdictions in which the business is active under an AEOI agreement.

AEOI also forms an important part of the Organization for Economic Cooperation and Development’s common reporting standard, a framework to fight tax evasion through the annual exchange of financial data between governments. Coming into effect after September 2018, the CRS will provide tax authorities worldwide with unprecedented amounts of data on taxpayers’ overseas activity.

As early CRS adopters, however, more than 40 jurisdictions—including France—are committed to making their first data exchanges at some stage during 2017. Switzerland is committed to 2018.

Confidential Discussions

In a July 12 email to Bloomberg BNA, a Swiss tax authority spokesman declined to identify further details of the discussions between France and Switzerland on the exchange of cross-border data.

Last year, Swiss tax authorities questioned the French government’s bulk request for UBS AG account information for all current and former French clients between 2006 and 2008.

At the time, UBS complained that the legal grounds for the government’s request were “ambiguous at best, adding that the bank’s client base had “changed significantly” over that period.

The agreement between France and Switzerland will not have any major impact on how Swiss banks provide future information, Federal Tax Administration spokesman Patrick Teuscher told Bloomberg BNA in a July 12 email. The exchange of data between France and Switzerland never stopped during the negotiating period, he added.

Negotiating the agreement “just took a little bit longer than both sides thought at the beginning,” Teuscher said.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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