Milano, October 2nd, 2009

Disclosure Rules & IssuesDisclosure Rules & Issues

Disclosure Rules & IssuesMilano, October 2nd, 2009

Chris Leenders, Koenen en Co, Maastricht, the Netherlands

Kerstin Heidrich, Revitrust, Zürich, Switzerland

Content1. Introduction2. Art. 26 OECD3. Domestic law in

a. Belgium d. Netherlandsb. Austria e. Italyc. Luxemburg

Content

4. Recent developments5. Swiss national/international regulations6. What to do? Grandfathering rules?

Introduction

• Credit crunch• Governments need money• Pressure on Tax Havens

Questions

1. Is the Swiss banking secrecy over?2. Does any future exchange of info include

pre renegotiated info?3. When is a request “specified” enough?

Article 26 OECD• Foreseeable relevant• Wide extent; no fishing expedition• Non residents are includedHowever• Not obtainable• Secret info

Commentary on art. 26 §3, nr. 14“not go beyond its own internal law and

administrative practice”

however

tax secrecy ≠obstacle for exchange

Reservations made to art. 26:• Austria• Switzerland• Luxemburg• Belgium

Domestic law in• The Netherlands• Belgium• Luxemburg• Italy• Austria

Recent developments• Austria: Treuhand Union• US: UBS 4450• Italy: NZZ online

Famiglia Agnelli• Netherlands: protocols to treaties

with: Switzerland, Belgiumtreaties on information exchange:

Bermuda, Guernsey, Cayman Islands, Caribbean

Tax Haven Switzerland ?Swiss tax system• Focus on direct taxes• Taxation of income &

wealth, profit & capital, consumption as well as certain other transactions• Healthy tax competition

between the cantons

Tax evasion vs. tax fraudTax evasion results from an intentional or negligent omission by tax liable person i.e., not the entire income/ all assets are included in the tax declaration.

Tax fraud implies the use in bad faith of counterfeit, falsified or false documents such as accounts, annual statements, salary sheets, vouchers, etc.

Banking secrecy – legal basisSwiss Civil Law• Duty of the banker to keep secrecy on the personal

circumstances of his or her client (contractual duty);• General provisions as regards the protection of personal

rights (Civil Law Art. 17 ff.).

Swiss Banking Law• Criminal liability of the banker in case of breach of his or her

professional discretion (Banking Law Art. 47).

Banking secrecy – abrogationNon-protection of felony and delinquency

– money launderers– fraudsters– terrorists– corrupts– dictators/potentates– tax exiles (?)

Aim of Double Taxation TreatiesSwitzerland:A DTT rules the right to tax certain income between the contracting states i.e., its sole aim is to avoid double taxation.

OECD & US:Besides its traditional aim to avoid double taxation a DTT also serves the prevention of tax escape.

Legal vs. administrative assistance Legal AssistanceExchange of informa-tion between judicial authorities in cases where criminal proce-dures have been instituted.

Admin. AssistanceExchange of informa-tion between tax authorities for (i) a correct application of the treaty and (ii) for all other tax purposes.

Requests for legal assistance Every year 1’600 – 2’000 requests for legal assistance are filed with Switzerland. Only a very small number relate to tax delinquencies.

Requests for legal assistance with fiscal background

Switzerland now on the “white list”• 12 DTT’s including the OECD standard disclosure rules

had to be signed to discharge Switzerland from the “grey list”.

• The contracting states are: Denmark, Luxembourg, France, Norway, Austria, UK, Mexico, Finland, USA and Qatar (10). In addition, the amendment of the DTT with Denmark by the territory of the Faroe Islands (1) and the automatic applicability of the OECD disclosure rules to the DTT with Spain (1) count as one more DTT each.

Stages until entry into force1. Initialing = finalization and agreement on the wording2. Signing = following the federal council’s authorization3. Enactment by the Parliament4. Facultative referendum = voluntary popular vote (based

on a respective request by 50’000 people/signatures)

An already enacted treaty can only be defeated, if the majority of the people vote “NO”.

“Fishing expeditions”… no chance!• Required Information

- name of the tax suspect- name of the bank

(exception France, but nodifference in practice)

- period of time- description of

information- tax purpose

Grandfathering• Majority of the protocols - new rules effective for tax

years beginning on or after 1 January of the next year following the entry into force of the relevant protocol

• US - new rules effective as of the date of signing of the relevant protocol (23 September 2009)

• France - new rules effective for tax years beginning on or after 1 January of the next year following the date of signing of the relevant protocol (1 January 2010)

• No retroactive information will be made available

Questions?

Thanks!