The spontaneous exchange of information – Part 3: When is information exchanged?

As of January 1, 2017, the legal bases that enable spontaneous information exchange have come into force. Findea explains in a four-part series of articles what exactly this means. In the first and second parts, it was explained what this involves and which information will be exchanged. This third part explains from when and precisely when the information will be exchanged.

Start of spontaneous information exchange

‍The legal bases on which spontaneous information exchange occurs came into effect on January 1, 2017. These bases concern the Mutual Administrative Assistance Convention of the Council of Europe and the Organisation for Economic Cooperation and Development (OECD), as well as the Swiss Federal Act on International Administrative Assistance in Tax Matters and the corresponding Ordinance. In fact, the spontaneous exchange of information will be implemented from January 1, 2018, and will concern the tax period from this date.

‍When will information be exchanged?

‍As the name "spontaneous information exchange" suggests, information is exchanged without prior request or a fixed deadline. As soon as a tax ruling meets one of the criteria of Art. 9 para. 1 of the Ordinance on International Administrative Assistance in Tax Matters, it is to be exchanged with the respective contracting state. Accordingly, spontaneous information exchange is to be conducted when a tax ruling:

1. Involves matters which concern a tax reduction for income from intangible assets or comparable rights or an international tax apportionment of principal companies
2. deals with transfer pricing between related persons or a transfer pricing methodology that has been determined by the competent Swiss authority without involving the authorities of other countries, with cross-border implications;
3. enables a reduction of taxable profits in Switzerland, which is not apparent in the annual or consolidated financial statements, with cross-border implications;
4. determines whether a permanent establishment exists or does not exist in Switzerland or abroad, or which profits are assigned to a permanent establishment; or
5. addresses matters that involve the structure of cross-border financial flows or income via Swiss legal entities to related persons in other countries.

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