Switzerland and the U.S. Initial the FATCA Agreement
Bern, 04.12.2012 - Bern, December 4, 2012 Switzerland and the U.S. initialed an agreement on the simplified implementation of the U.S. tax legislation FATCA yesterday in Washington, D.C. The simplifications apply in particular to Social Security, private retirement funds and casualty and property insurances, which are exempt from FATCA, as well as to the due diligence requirements of financial institutions.
The Foreign Account Tax Compliance Act (FATCA), which went into effect on March 18, 2010, provides that all income from accounts held abroad by persons liable to pay taxes in the U.S. be disclosed for U.S. taxation purposes. FATCA requires Foreign Financial Institutions (FFI) to conclude an agreement with the U.S. tax authorities which obligates them to report identified U.S. accounts.
The initialed agreement provides for the following simplifications for significant segments of the Swiss financial industry:
- Social Security, private retirement funds as well as casualty and property insurances are exempt from the application of FATCA
- Collective investment vehicles as well as financial institutions with a predominantly local clientele are deemed, under certain requirements, to be FATCA-compliant and are subject only to a registration obligation
- The due diligence obligations on the identification of U.S. clients to which the rest of the Swiss financial institutions are subject are created in such a way that they can reduce the administrative burden
The agreement ensures that accounts held by U.S. persons at Swiss financial institutions are reported either with the consent of the account holder or by administrative assistance channels through group requests. If consent is not given, the information will not be exchanged automatically , but only on the basis of the administrative assistance provision in the Swiss-U.S. Double Taxation Convention.
The agreement is subject to the approval of the Swiss Parliament and to an optional treaty referendum.
The text of the agreement will be published after the agreement is signed.
Address for enquiries
Mario Tuor, Head of Communications, State Secretariat for International Financial Matters, tel. +41 31 322 46 16
Federal Department of Finance