Undeclared foreign bank accounts

The automatic exchange of information has been in force since January 1, 2017. Read here what this means for undeclared foreign bank accounts.

Automatic exchange of information (AEOI)

As previously announced, the Swiss legal basis for the automatic exchange of information (AEOI) came into force on January 1, 2017. An exchange is already planned for the 2017 calendar year, primarily with the European Union as well as countries such as Australia, Canada, Japan and South Korea. Other countries such as New Zealand, Brazil, India, Israel, South Africa, etc. will follow on January 1, 2018. Since January 1, 2017, the tax authorities of European Union countries have been collecting data from all financial institutions, such as account number, tax identification number, name, address, date of birth, account balance and all types of income, from persons liable to pay tax abroad. There is no threshold or minimum amount for this. The exchange of financial information between the individual tax jurisdictions of the participating countries is planned for 2018.

The data of high-value individuals (greater than CHF 1 million) will be exchanged in March 2018 and the remaining low-value individuals in September 2018. The Federal Tax Administration (FTA; relevant tax authority in Switzerland) will forward the financial information received from abroad to the cantonal and communal assessment authorities responsible, which intend to apply and enforce Swiss tax law.

Undeclared foreign bank accounts

What does this mean for Swiss taxpayers who have not taken the necessary care when declaring foreign bank accounts or have deliberately refrained from declaring them?

The time frame for independent mitigating action is becoming increasingly tight.

In principle, it can be assumed that doing nothing is not advisable. Your tax authorities will find out about the "black" account in fall 2018 at the latest. Furthermore, the origin does not matter; the savings account for the German godson, the current account to pay the electricity bill for the Spanish vacation home, the account for the underage daughter for the language course in Paris and the account from the trip around the world in Australia will be treated in the same way as the black account in southern Germany. On the contrary, you will be confronted with the question of why you have an account in southern Spain if the vacation home is not yet known to the tax authorities.

Impunity for voluntary disclosure

On January 1, 2010, the so-called "small tax amnesty" came into force, which, among other things, simplified voluntary disclosure. It allows a taxpayer to make a one-off self-disclosure of tax evasion without incurring a penalty or fine. However, back taxes and interest for a maximum of the last 10 years remain due. The decisive factor for voluntary self-disclosure without penalty is that it is made on one's own initiative, spontaneously and voluntarily. In the case of undeclared foreign bank accounts in connection with the automatic exchange of information, the FTA announced on September 15, 2017 that, in its view, this will no longer be the case after September 30, 2018.

If you have any questions or require advice in this regard, please do not hesitate to contact us.