Federal Council launches consultation on unilateral application of OECD standard on exchange of information upon request

Bern, 22.10.2014 - Today, the Federal Council launched the consultation procedure on the Federal Act on the Unilateral Application of the OECD Standard on the Exchange of Information (GASI). The law should allow Switzerland to swiftly amend its double taxation agreements (DTAs) which do not yet comply with the international standard for the exchange of information upon request. The consultation will last until 5 February 2015.

On 19 February 2014, the Federal Council instructed the Federal Department of Finance to draw up a corresponding draft. The bill for the GASI makes provision for the unilateral application of the provisions of Article 26 of the OECD Model Convention to all DTAs which are not yet in line with the aforementioned international standard. It is part of the Federal Council's efforts undertaken so far to implement the Global Forum's recommendation to create a dense network of information exchange agreements. Amongst other things, these efforts include the bilateral renegotiation of existing DTAs and the conclusion of new DTAs and tax information exchange agreements (TIEAs), as well as the signing of the multilateral OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters on 15 October 2013. All of these measures are in line with the Federal Council's strategy for a competitive and tax-compliant financial centre in line with the international standard.

Switzerland has already revised the majority of its DTA network and signed seven TIEAs. Although 38 of these revised DTAs are in force, a certain number are not yet in compliance with the OECD standard to which the new law would apply. If it were to enter into force today, 69 states or territories would be affected. This number should be lower, however, by the time the law enters into force.

Unilateral application will occur in compliance with the principles of reciprocity and confidentiality of the exchanged information. In concrete terms, this means that Switzerland will continue to refrain from responding to a request if the requesting state is not in a position to respond to requests from Switzerland in line with the OECD standard and is unable to comply with the data protection rules and the principle of speciality. The proposed mechanism is a transitional measure. As soon as states or territories can exchange information upon request with Switzerland on the basis of a DTA in conformity with the standard or another international agreement, the GASI will no longer be applicable to the states or territories concerned. It will be repealed as soon as all of the states and territories concerned are covered by an agreement which makes provision for the international standard recognised by the OECD. Unilateral application concerns only the exchange of information upon request and makes no provision for the spontaneous or automatic exchange of information.