Milano, October 2 nd, 2009 Disclosure Rules & Issues

Milano, October 2nd, 2009 Chris Leenders, Koenen en Co, Maastricht, the Netherlands Kerstin Heidrich, Revitrust, Zürich, Switzerland

Content 1.Introduction 2.Art. 26 OECD 3.Domestic law in a. Belgiumd. Netherlands b. Austriae. Italy c. Luxemburg

Content 4.Recent developments 5.Swiss national/international regulations 6.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 included However 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, Belgium treaties 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 fraud Tax 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 basis Swiss 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 – abrogation Non-protection of felony and delinquency –money launderers –fraudsters –terrorists –corrupts –dictators/potentates –tax exiles (?)

Aim of Double Taxation Treaties Switzerland: 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 Assistance Exchange of informa- tion between judicial authorities in cases where criminal proce- dures have been instituted. Admin. Assistance Exchange 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 force 1.Initialing = finalization and agreement on the wording 2.Signing = following the federal council’s authorization 3.Enactment by the Parliament 4.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 no difference 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!