FATCA agreement

The agreement between Switzerland and the United States on cooperation to simplify the implementation of FATCA entered into force on 2 June 2014. The Federal Council brought the corresponding implementing act into force on 30 June 2014. 

With the enactment of the Foreign Account Tax Compliance Act (FATCA), the United States wishes to ensure that all accounts held abroad by US taxpayers can actually be taxed. FATCA is a unilateral set of US regulations that applies worldwide for all countries. It requires foreign financial institutions to disclose information on US accounts to the Internal Revenue Service or levy a high tax.

The administrative and financial burden associated with the implementation of FATCA is con-siderable for foreign financial institutions. This burden will be reduced by the FATCA agreement, as it makes provision for reductions in the administrative burden for Swiss financial institutions. FATCA implementation in Switzerland is based on Model 2, which means Swiss financial institutions will disclose account details directly to the US tax authority with the consent of the US clients concerned. The United States will have to request data on recalcitrant clients through normal administrative assistance channels.

Since 20 September 2019 - when the protocol of amendment to the double taxation agreement between Switzerland and the USA came into force - group requests under the FATCA agreement can be made for cases from 30 June 2014. In accordance with the FATCA agreement, the US tax authority, the IRS, can request information on all accounts that Swiss financial institutions have reported to it in aggregated form. Upon receipt of a FATCA group request, the Federal Tax Administration (FTA) requests the financial institution concerned to provide it with the information described in the FATCA agreement within 10 days. Guidance on the preparation of FATCA group requests can be found on the website of the FTA.

The Federal Council approved the mandate for negotiations with the United States on switching to Model 1 on 8 October 2014. The mandate provides for the automatic exchange of information. It is still unknown at the present time when there will be a corresponding agreement.

Further information

Last modification 20.09.2019

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