How does the automatic exchange of information work?
The automatic exchange of information
– a simple explanation: Swiss banks – clients from all over the world trust them. And here is why: They stand for stability, excellent quality and for a high level of privacy protection. But a Swiss account and bank-client confidentiality must not be misused to avoid paying taxes in one’s home country. This is why the Swiss banks have decided for the future to adopt the international standard for automatic exchange of information, short AEOI. The AEOI aims at ensuring that tax offence via a foreign bank account is no longer possible. The Swiss banks are thereby making an important contribution to ensuringthat only tax compliant assets are deposited in Switzerland. More than 90 countries have already committed to adopting this new international standard. These include some of Switzerland’s most important international competitors such as London Hong Kong and Singapore. So how exactly does the automatic exchange of information work? Each year, the Swiss banks will disclose certain information about their foreign clients to the Swiss tax authorities. The prerequisite for doing so is that the respective client’s home country is also taking part in AEOI and has signed an agreement with Switzerland. Swiss tax authorities then relay that information up to the tax authorities of the clients home country. The authorities receive only tax relevant information, namely: The clients personal information: so Name, address, domicile, tax number, date and place of birth. The bank account number. The name and identification number of the bank. The account balance at the end of the year and the gross investment income. And that’s all. What clients spend their money on or which financial products they invest into remains private. The entire process is subject to data protection and the information exchanged may only be used for tax purposes. If a partner country does not observe these obligations, Switzerland can – as can all other participating countries – discontinue the collaboration and stop the supply of data. Under the AEOI, the clients of the banks in Switzerland will keep benefiting from
excellent services and the traditionally high level of privacy protection for tax
compliant assets. For more information on the automatic exchange of information please go to: www.swissbanking.org/aeoi