Milestone Swiss-US agreement opens prospect of requests back to 2009
The most important clause removes the distinction between tax evasion and tax fraud in both individual and group requests for exchange of tax information, making it easier for the US to obtain information from Switzerland that 'may be relevant' to US taxes. This is in line with the international standard on the exchange of information upon request, which Switzerland already applies to more than 100 states and territories, but not, to date, to the US.
Under the protocol, requests for administrative assistance must relate to financial accounts after 23 September 2009, though group requests made by the US under its Foreign Account Tax Compliance Act are admissible only for cases after 30 June 2014.
The protocol was signed on 23 September 2009, but has been held up due to objections by US congressman Rand Paul, who considers that tax information exchange agreements are a violation of US citizens' privacy rights. His arguments were only overruled by the Senate in July this year. The Swiss parliament had already ratified the agreement in 2010.
Both governments said the protocol represents a 'milestone' in tax relations between them. Negotiations will now take place to agree further amendments to the treaty. 'Tax administration will be clearer, faster and more efficient because we have this protocol in place', commented US ambassador Edward McMullen.
The treaty also includes a compulsory arbitration clause ensuring that double taxation is avoided even in cases where the competent authorities cannot agree under mutual agreement procedure talks.
A treaty between the US and Luxembourg, also held in limbo for ten years, took effect on 9 September 2019.
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