Switzerland amends CRS legislation to abolish the White List approach

Anna Szkudlarek
Anna Szkudlarek
Director, Head of Products
Switzerland amends CRS legislation to abolish the White List approach

Effective from 01.01.2019 only jurisdictions with a CRS exchange agreement in place with Switzerland will qualify as participating states for CRS purposes.

According to the definition of the Standard For Automatic Exchange of Financial Account Information in Tax Matters (AEoI or CRS), a participating state is a state with which an AEoI agreement exists. However right at the outset the OECD recognized the need to reduce the already onerous compliance work performed by financial institutions and let them treat those jurisdictions that merely committed to introduce CRS as participating states by implementing a so-called transitional provision into their local law.

Switzerland made use of this in the ordinance (Article 1) and until now Swiss financial institutions were able to document other financial institutions, in jurisdictions that committed to implement CRS (Common Reporting Standard) but neither having any exchange agreements nor meeting OECD’s minimum requirements to exchange information on an international scale, as participating states.
Effective from 1 January 2019, Switzerland will terminate its white list for participating states. Starting from that date on, only jurisdictions with a CRS exchange agreement in place with Switzerland will qualify as participating states.

Impact on Swiss financial institutions

Swiss list of participating states currently amounts to more than 75 AEOI partner states and those countries included in the current List of Participating States will remain to be treated as participating states. 

According to the Swiss Federal Council the removal of the transitional provision should have only a minor impact on practical AEOI implementation by Swiss financial institutions.

It is however recommended that Swiss financial institutions review their self-certification forms to ensure they are compatible with the amendment to Article 1, start identifying the account population subject to re-documentation and prepare the necessary client communication to be ready to contact account holders resident in non-participating states from Swiss point of view. The affected population shall include professionally managed investment entities account holders in jurisdictions currently treated as participating jurisdictions solely due to the white list approach i.e. not listed on the above mentioned List of Participating States. These account holders will have to be treated as passive non-financial entities and disclose its controlling persons to Swiss banks and other Swiss financial institutions starting from 1 January 2019. 
 

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