Swiss authorities have begun sharing account data with countries who meet international requirements on confidentiality and data security. This strategic move has placed Switzerland in fierce competition with fast-growing economies including Singapore and Hong Kong.
In a significant development that marks as a milestone in Switzerland’s banking industry, era of secrecy cloaking Swiss bank accounts has officially come to an end in the country. Switzerland has been historically the world’s biggest center for managing offshore wealth.
Swiss authorities have begun automatically sharing client data with tax authorities in dozens of countries.
On Friday, Switzerland’s Federal Tax Administration (FTA) stated, for the first time, towards the end of September, it had exchanged financial account data under global standards that aim to crack down on those who cheat and hide their ill-gotten wealth in offshore accounts.
Although banking secrecy still persists in some areas, however gone are the days when clients can stash away their wealth across borders beyond the prying eyes of the tax man.
To begin with, the initial exchange is scheduled to be with European Union countries and nine other jurisdictions, including Guernsey, Australia, Isle of Man, Canada, South Korea, Iceland, Japan, Norway and Jersey.
“Cyprus and Romania are currently excluded as they do not yet meet the international requirements on confidentiality and data security,” said the FTA.
Providing data to France and Australia saw some delay “as these states could not yet deliver data to the FTA due to technical reasons”, said the FTA while adding that it also had not yet received data from Croatia, Estonia and Poland.
Nearly 7,000 banks, insurers, trusts, and other financial institutions have registered with the FTA to collect data on millions of accounts and send them on the Swiss tax agency. The FTA in turn sent information on around two million accounts to partner states. It put no value on the accounts in question.
The data includes the owner’s name, address, country of residence and tax identification number as well as the reporting institution, account balance and capital income. The data will allow authorities to check whether taxpayers have correctly declared their foreign financial accounts.
The annual data exchange is set to expand to around 80 partner states in 2019, provided they meet requirements on confidentiality and data security. The OECD Global Forum on Transparency and Exchange of Information for Tax Purposes reviews states’ implementation of the accord.
Facing international pressure, Swiss banking secrecy norms have seen some relaxations in the past years. As a result, the wealthy can no longer use Switzerland to hide their wealth.