Information exchange - from tax secrecy to tax transparency

The Convention on Mutual Administrative Assistance in Tax Matters (MAC) has been developed by the European Council and the OECD in order to combat international tax evasion and tax fraud.

The convention represents the starting point for multilateral cooperation on tax-related matters. Switzerland joined MAC in 2013.

MAC serves as the international legal basis for the following three types of exchange of information

  • Exchange of Information on Request
  • Automatic Exchange of Information (AEOI)
  • Spontaneous Exchange of Information (SEOI)

The SEOI and the Exchange of Information on Request are compulsory for the signatory States. However, MAC does not necessarily imply the implementation of the AEOI. The AEOI only applies between Member States to MAC that have also joined the Multilateral Competent Authority Agreement on the Automatic Exchange of Information in relation to financial accounts (MCAA). MCAA is based on Article 6 MAC and was developed as an important foundation for the cross-border automatic exchange of information under the OECD.

In addition, States may also agree on the AEOI by way of bilateral agreements. Switzerland has a so called bilateral AEOI-agreement with the EU, Australia, Japan, Norway, Canada and South Korea and other countries.

The implementation of the OECD standard into domestic law has been in progress since 2013. Various statutes, ordinances and guidelines have come into effect since then. Some statutes are still in the consultation phase. In December 2015 the Swiss Federal Parliament adopted the MAC and MCAA and on this occasion also agreed upon an amendment of the Federal Act on International Administrative Assistance in Tax Matters (TAAA). At the same time as the TAAA, the Federal Ordinance on International Administrative Assistance in Tax Matters has been amended and put into effect by the Federal Council on the 1st of January 2017. Furthermore, the AEOI-Federal Law regarding the automated international information exchange in tax matters together with the corresponding implementation rules, the AEOI regulation, has been enacted with the Federal Ruling from December 2015. These treaties, statutes and ordinances are also in effect since the 1st of January 2017. The first information exchange took place in 2018.

Exchange of Information on Request

Switzerland exchanges information with various States on request based on numerous double tax agreements (DTAs). DTAs do not only prevent double taxation, but also regulate the exchange of information on request. This process requires that information is relevant for the enforcement of domestic law in the State that requests the information. However, basically only the requesting State is in the position to determine whether the information is actually of a significant nature. The international exchange of information on request was declared an international standard in 2012 and is therefore also permitted in Switzerland. In March 2016 the Federal Administrative Court delivered a judgement denying administrative assistance in tax matters in response to a group request from the Dutch tax authorities, due to a lack of information identifying the people concerned (Judgment by the Federal Administrative Court A-8400/2015 from March 21, 2016). However, the Federal Court subsequently granted administrative assistance in tax matters to the Dutch tax authorities, with the provision that group requests that do not mention those concerned by name are generally allowed in accordance with the DTA between Switzerland and the Netherlands, if the request contains enough information to identify the people in question. This shows that foreign tax authorities are using the practice of exchanging information on request.

Automatic Exchange of Information

The implementation of the AEOI is also intended to create a uniform standard to combat tax evasion at a global level, thus fostering tax honesty. The priority here is on imparting defined information to States at specific intervals and as a matter of routine. Both companies and individuals are affected by this new standard. The scope of the AEOI is restricted to information on the identity of the person in question (name, address, date and place of birth, tax identification number) and information about the corresponding account (account number, balance, interest, dividends and other income). The implementation of the AEOI into Swiss domestic law stands for the end of bank secrecy for individuals resident in an AEOI signatory State, which have a bank account in Switzerland. However, banking secrecy still exists for Swiss residents subject to tax in Switzerland and with accounts in Switzerland. Alongside the AEOI some statutes were enacted for the purpose of exchanging tax-related financial information. This includes for instance the EU Savings Tax Directive, the Foreign Account Tax Compliance Act (FATCA) and the Qualified Intermediary (QI) system with the USA.

Spontaneous Exchange of Information

In this type of information exchange the information is not transmitted on the basis of a previous request. The information is rather sent as soon as a reporting State assumes an interest of another State in receiving the information. This should apply when the reporting State assumes a tax fraud or the tax evasion by way of artificially transfer profits within a corporate group. Article 7 Para. 1 MAC includes a list of other cases, in which information may be spontaneously exchanged to another State. In doing so, the tax authorities provide all information they deem to be relevant. This includes tax rulings, especially those with provisions relating to tax regimes, transfer pricing, permanent establishments or real estate. As a consequence thereof, the State that exchanges the information ultimately makes the decision as to what kind of information and to the scope of information which will be transferred. This type of exchange of information mainly concerns international affiliated companies with sites in Switzerland, but may also affect individuals in cross-border situations. The legal foundations for the spontaneous information exchange are in effect since the 1st of January 2017. The information exchange took place for the first time in the year 2018. The cantons have specified the implementation of these new regulations and are determining in particular how the spontaneous information exchange will be applied. It is worth examining closely what is being exchanged between the countries as well as when and how it is done.


For decades a considerable reticence on the part of tax authorities to disclose information in response to requests from other States was as much a feature of Switzerland as the mountains and chocolate. The recent ratification of MAC marks a complete reversal in this attitude. In the near future Switzerland will provide to a large extent tax information to foreign tax authorities relating to international corporations and private individuals.

Internationally operating corporations and private persons in cross-border situations must be aware of the fact that information on financial and tax issues will be exchanged with other States. In order to ensure that they do not suffer any negative consequences due to these changes, affected corporations and individuals should prepare themselves now and ensure that their financial and tax affairs in Switzerland are thoroughly documented and verified.