In our last blog post, we explained the difference between tax evasion and tax fraud. Now we will cover a topic that is directly related. As already known, in Switzerland there is an obligation to declare all assets, such as houses or bank accounts abroad, in the tax return. In order to monitor this, the Organization for Economic Cooperation and Development (OECD) has established the AEOI (Automatic Exchange of Information) program. The OECD has established common standards and guidelines for the exchange of information and is promoting the implementation of AEOI on a global level.
Aim of the AEOI
The main objective of the AEOI is to enable the automatic exchange of financial information between different countries. This is to ensure that income and financial assets of taxpayers are properly declared and taxed, regardless of the country in which they are located. It aims to make tax evasion more difficult and to help tax authorities correctly tax taxpayers' income and assets.
What is exchanged?
Under AEOI, financial information is exchanged on foreign taxpayers who have income or financial assets in another country. Financial institutions in participating countries are required to collect and share information about foreign account holders with tax authorities. This includes information on accounts, interest income, dividends, capital gains on financial assets and other financial assets. The information is automatically exchanged between countries.
The AEOI has gained widespread acceptance worldwide, and many countries have joined the system to strengthen tax transparency and audit cooperation. However, it is important to note that participation in the program and the exact details of the information exchange are based on bilateral and multilateral agreements between countries. Switzerland has been part of this agreement since January 1, 2017.