Switzerland

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Phase 2 Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Although legal requirements have been introduced for the reporting of ownership information in relation to bearer shares, these reporting mechanisms do not sufficiently ensure that the owners of such shares can be identified within the stipulated timeframes of the reporting regime.  Switzerland should ensure that appropriate reporting mechanisms are in place to effectively ensure the identification of the owners of bearer shares in all cases. 
Companies incorporated outside of Switzerland but having their effective management in Switzerland which gives rise to a permanent establishment are not required to provide information identifying their owners as a part of registration requirements. Therefore, the availability of information that identifies any owners of such companies will generally depend on the law of the jurisdiction in which the company is incorporated and so may not be available in all cases.  In such cases, Switzerland should ensure that ownership and identity information is available. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  The supervision of the obligation for certain companies (SAs and SCAs) to maintain a register of shares, and the effectiveness of the enforcement provisions should be improved, as there are currently no clear penalties for failure to maintain a register of shares  Switzerland should ensure that its system of oversight for SAs and SCAs is effective. 
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.   Some bearer savings books remain in existence although they may no longer be issued and must be cancelled upon physical presentation of the bearer savings book at the bank.  Switzerland should ensure that there are measures to identify the owners of any remaining bearer savings books. 
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Switzerland does not have powers to access bank information in respect of requests made under some of its agreements.  Switzerland should ensure that it has access to bank information in respect of EOI requests made pursuant to all of its EOI agreements. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.   Information on deceased persons cannot be exchanged in all circumstances in Switzerland, because of the impossibility to notify the deceased person or the deceased person's estate, under Swiss jurisprudence.  Switzerland should ensure that information in relation to deceased persons can be exchanged in all cases. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Although Switzerland introduced an exception to notification, during the period under review a number of requests were proceeded with without the exception to notification, because this exception was not yet available. In addition, the application of the exception to notification in practice was limited. Only six of the 24 requests received since the introduction of the new exception included an application for the notification exception, where the requesting party provided a justification for the exception to apply.  Switzerland should monitor the application of the exception to notification to ensure the application is in line with the standard. 
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   32 EOI agreements are not consistent with the standard.  Switzerland should ensure that each of its EOI agreements allows for the exchange of information in line with the standard. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Switzerland had a restrictive approach to the concept of foreseeable relevance, which created delays in the treatment of the requests and limited the exchange of information in certain cases. However, this practice has changed towards the end of the review period.  Switzerland is recommended to monitor its interpretation of the foreseeable relevance concept to ensure it is in line with the standard. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Switzerland should continue to develop its EOI network to the standard with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Any person concerned by the request or with a right to appeal can exercise his/her right to see the file, including the request letter, subject to exceptions. This is not in accordance with the principle that the request letter should be kept confidential as required by the standard.  Switzerland is recommended to ensure that it does not exceed the confidentiality requirements as provided for under the international standard. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Although Switzerland has indicated that the application of the exception to the right to see the file (including the request letter) would be broadly interpreted, the exception has not yet been applied in practice and this approach is very recent and has not been tested.  Switzerland is recommended to monitor that its new approach to the application of the exception to the right to see the file (including the request letter) and the application of the exception is applied effectively in practice. 
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  Switzerland’s approach regarding the application of the concept of good faith has had a significant impact on EOI in practice.  Switzerland should modify its law and/or practice as appropriate to ensure that it can give effect to the obligations under its EOI mechanisms. 
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Whilst Switzerland has improved its organisational processes and resources to its EOI system to help ensure more timely responses and the competent authority staff maintain high professional standards and expertise in relation to EOI, delays were noted in the EOI process during the period under review.  Switzerland should further improve its resources and streamline its processes for handling EOI requests to ensure that all EOI requests are responded to in a timely manner. 

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.