Switzerland: Double Tax Treaties

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- SWITZERLAND DOUBLE-TAX TREATIES
- SWITZERLAND TABLE OF TREATY RATES
- SWITZERLAND OTHER INTERNATIONAL AGREEMENTS

Switzerland Double-Tax Treaties

Switzerland has Double Taxation Treaties with about 100 other countries, more than 30 of these are based on the OECD model. The general effect of the treaties for non-residents from treaty countries is that they can obtain a partial or total refund of tax withheld by the Swiss paying agent. Although the full amount of withholding tax is deducted at source the difference can be re-claimed by the non resident from the Swiss tax authorities. Where there is no double taxation treaty in place withholding taxes deducted in the foreign jurisdiction on remittances paid to a Swiss entity give rise to a tax credit in Switzerland.

No withholding tax is levied on royalties paid to foreign beneficiaries. Profits repatriated abroad by the Swiss branch of a foreign company do not attract withholding taxes irrespective of any double taxation treaty.

Treaty abuse: A repayment of withholding taxes under the terms of a treaty will be denied where there has been "abuse". Abuse occurs when a foreign-controlled legal entity which is resident in Switzerland fails one of the four following tests:

• The entity must have a reasonable debt/equity ratio (generally the total of all interest-bearing loans should not exceed 6 times the company's equity);
• The entity must not pay excessive interest rates on debt (for the purposes of this test the accepted rate varies from time to time);
• The entity must not pay more than 50% of its income as management fees, interest or royalties to non residents;
• The entity must distribute at least 25% of the income which could be distributed as dividend.

Where any one of the four tests are failed the portion of withholding tax deducted and which is deemed refundable under the terms of the treaty is not refunded.

Additionally, treaty provisions do not apply to dividends, interest or royalties paid by a Swiss entity to a German, Italian, French or Belgian entity if the Swiss entity is wholly or partly exempt from cantonal tax under the tax incentives applicable to specific types of company (i.e. domiciliary, holding, auxiliary, mixed and service companies). See Offshore Legal and Tax Regimes.

On March 13, 2009, the Federal Council announced that Switzerland intends to adopt OECD standards on administrative assistance in tax matters in accordance with Article 26 of the OECD Model Tax Convention. The decision permits the exchange of information with other countries in individual cases where a specific and justified request has been made. The Federal Council decided to withdraw the corresponding reservation to the OECD Model Tax Convention and to enter into negotiations on revising double taxation agreements. It maintains, however, that Swiss banking secrecy remains intact.

According to the Swiss, the adoption of the OECD standard will have no impact on the situation for taxpayers resident in Switzerland. The right of the Swiss tax authorities to access bank data under Swiss domestic law is not affected by the decision, stated the Federal Council's release. The Council also stated that it "resolutely rejects any form of automatic exchange of information."

The decision of the Federal Council is being implemented within the framework of bilateral double taxation agreements. The greater scope for exchange of information only has practical effects when the renegotiated agreements come into force. In addition, adjustments must be made to the agreement with the EU on the taxation of savings income.

The Federal Council laid out the following conditions for its future policy on administrative assistance in tax matters:

• Respect for established administrative assistance procedures
• Restriction of administrative assistance to individual cases (no fishing expeditions)
• Fair transitional solutions
• Limitation to taxes covered by the OECD Model Tax Convention
• The principle of subsidiarity in accordance with the Model Tax Convention
• Willingness to eliminate discrimination.

In January 2007, Switzerland and Japan agreed to take up bilateral negotiations regarding an economic partnership and free trade agreement. A joint study group whose aim it is to strengthen economic relations between Switzerland and Japan had, over the previous twelve months, undertaken a feasibility study at the official level of a comprehensive economic partnership and free trade agreement between Switzerland and Japan. In its report, the study group concluded that such an agreement would significantly enhance bilateral economic relations (trade in goods, services, investment), and could strengthen the competitiveness of firms in both countries. Japan is Switzerland's third most important trade partner (after the EU and the USA).

Also in January 2007, Federal Councillor Doris Leuthard signed the EFTA Free Trade Agreement with Egypt and reported that "considerable progress" has been made in negotiations regarding a free trade agreement between the EFTA States and Canada. EFTA ministers have also met with the Indonesian Minister of Trade to discuss the feasibility of a comprehensive trade agreement. The other EFTA members include Iceland, Liechtenstein and Norway.

In February 2007, Ms Leuthard, who heads the Federal Department of Economic Affairs (FDEA), led a Swiss business delegation to Brazil with the aim of improving access to the Brazilian market for Swiss products and investment. The visit was expected to lead to the signature of a Memorandum of Understanding between Switzerland and Brazil, and the creation of a Joint Economic Commission. Brazil is one of the few countries with which Switzerland has so far had neither an investment protection agreement nor a double taxation convention.

A protocol to the double taxation convention between the United Kingdom and Switzerland was signed in London on 26 June 2007.

The protocol makes some amendments to the existing double taxation convention, dated 8 December 1977. The main amendments are the elimination of taxation at source on dividends, where the beneficial owner of the dividends has a substantial participation in the payer or is a pension scheme.

The protocol also amends the exchange of information article. It provides that, in future, information will be exchanged in cases of tax fraud or the like, and in cases involving holding companies.

Measures are also contained in the new protocol relating to pensions. In future, lump sum payments may be taxed only by the state in which they arise. Also, pension contributions paid to a scheme recognised for tax purposes in one country may, under certain conditions, be deductible in the other country.

In October 2010, an agreement was signed to begin negotiations towards an agreement that will see undeclared accounts held by Britons in Switzerland taxed and more information with regards tax and banking information shared between the two states. The agreement will, among other things, expand cross-border cooperation in tax matters and improve market access for banks. Negotiations are expected to commence at the beginning of 2011.

Officials from Turkey and Switzerland met in the Turkish capital, Ankara in May 2008 to discuss matters of a commercial and economic nature.

According to a report from the Turkish Press, Turkey's Deputy Undersecretary, Ulker Guzel and Switerland's head of Bilateral Economic Relations, Monica Ruhl deliberated over several subjects important to both countries, including measures to increase bilateral investment, disputed trade issues, and various other matters.

An agreement between Switzerland and Turkey with the aim of eliminating the double taxation of income tax was then signed in Bern, following bilateral discussions focusing on budgetary and fiscal policies. The agreement was ratified by Switzerland on 25 August, 2010.

Negotiations concerning this agreement began back in 1986. The differing policies on agreements pursued by each country explain why the process has been so drawn out, and according to the Swiss authorities, show "the determination of the parties to reach a compromise".

To a large extent this agreement follows the OECD Model Agreement and Swiss policies in this regard.

The first round of official negotiations for the revision of the double tax avoidance treaty between Japan and Switzerland were held in Bern from November 17 to 20, 2008. This was the first round of negotiations for the revision of the treaty since it was concluded in 1971.

In addition to this, on September 29, 2008, the two countries confirmed that agreement in principle had been reached on the Agreement on Free Trade and Economic Partnership (EPA).

Under the trade agreement, both sides have agreed to eliminate or reduce tariffs on industrial, agricultural, forestry and fishery products comprehensively. In addition, the agreement contains provisions on non-tariff measures.

In a statement on January 16, 2009, Doris Leuthard, head of the Swiss Department for Economic Affairs, announced that she would travel to Tokyo on February 19 to sign the accord and finalise the agreement.

It was announced in November 2008 that Pakistan and the Swiss Confederation had signed an updated treaty for the avoidance of double taxation which sets new withholding tax rates for dividend, interest and royalty income.

Tax officials from both countries met in Islamabad on November 24, where they exchanged the necessary Instrument of Intent to bring the Agreement into force.

According to the revised Agreement, companies with a 20% participation in dividends will be taxed at 10%, with all other cases to be taxed at 20% in the source country. The withholding tax rate on interest, royalties and fees for technical services will be 10%. Students with an income of CHF18,000 or less will be exempt from paying tax on their earnings.

At the end of 2008, the French Prime Minister François Fillon unveiled plans, not only to sign a bilateral tax agreement with Switzerland, but also to implement – on a bilateral basis – the anti-fraud agreement established between Switzerland and the European Union, even though this agreement has not yet been fully ratified by all member states.

Demonstrating a marked softening of attitude, Fillon emphasised his determination to forge ahead and foster closer trade and economic relations between the two countries, despite acknowledging remaining differences in fiscal policy. Indeed, in a bid to overcome these differences, both sides have resolved to establish a working party, designed to evaluate individual policies, and propose a way forward.

Keen to clarify that France does not regard its neighbour as a ‘tax haven,’ Fillon did, however, express his hope to persuade Switzerland to comply with key regulations drawn up by the Organisation for Economic Co-operation and Development, in terms of fiscal exchange of information, and reaffirmed France’s determination to take resolute action against any areas deemed insufficiently regulated or transparent.

In December 2008, Micheline Calmy-Rey, Swiss Minister of Foreign Affairs, visited Malta to sign a double taxation avoidance agreement with her Maltese counterpart, Tonio Borg.

The statistics for January to July 2010 show that imports from Switzerland were EUR72m (mainly pharmaceuticals, jewellery, electric machinery), down from EUR91.2m for the same period in 2009, while Malta’s exports rose to EUR9.3m (mainly machinery and pharmaceuticals) compared to EUR5.7m in the first half of 2009.

The agreement will enter into force following ratification by both countries.

The Protocol amending the Double Taxation Convention between Switzerland and the United Kingdom for the Avoidance of Double Taxation with respect to Taxes on Income entered into force on December 22, 2009.

The most important amendment to the Double Taxation Convention of December 8, 1977 is the full exemption from tax at source on dividends paid to a company with a substantial shareholding in the company paying the dividends, or to a pension scheme.

Full exemption from tax at source will apply to dividend payments between companies where one company holds at least 10% of the capital of the company paying the dividends. Dividend payments to pension schemes will also be exempt from tax. For all other dividend payments the state in which they arise retains a residual tax rate of 15%, i.e. any tax at source may not exceed 15% of the gross amount of the dividends.

The Protocol also contains new measures on the taxation of pensions and deduction of tax on pension contributions. In future, lump sum payments from pension schemes may be taxed only by the state in which they arise. Furthermore, pension contributions paid in one contracting state will, under certain circumstances, be tax-deductible in the other contracting state.

In accordance with Switzerland's commitments within the OECD and towards European Union member states, the Protocol extends administrative assistance to holding companies and cases of tax fraud or similar offences.

The provisions of the Protocol are applicable to Swiss taxes from January 1, 2009 and concerning British taxes, from April 1, 2009 for corporation tax and from April 6, 2009 for income tax. The entitlement to tax credits in relation to dividends paid by companies resident in the UK to residents in Switzerland will be terminated for dividends paid on or after April 6, 2009.

In March 2009, Swiss Finance Minister Hans-Rudolf Merz announced that discussions into an OECD model agreement with Japan were well advanced.

Merz explained that Switzerland would initially sign treaties with those countries of ‘primary’ importance to the Swiss economy. Japan, as a crucial trade partner, bolstered by the signing of a free trade agreement in February, and already in discussions with Switzerland over the possibility of a double tax agreement, naturally made it ‘top of the pile’, informed Merz.

Merz underlined that Switzerland would also give priority to countries who had expressed an interest on re-negotiating an existing double tax agreement. Addressing the proposed double tax treaty with the United States, Merz announced that: “The United States Finance Minister, Timothy Geithner, rang to announce Washington's interest on March 13, about five hours after the Swiss cabinet announced its plan to ease banking secrecy.”

Speaking to a press conference on March 25, Merz announced that negotiations into the possibility of concluding a revised treaty were underway but warned it would not be a rapid process.

Elaborating on Switzerland’s OECD standards adoption plan, Merz underlined that negotiating an agreement with the EU would be a long-winded process, and therefore tackled later, but announced that Switzerland would endeavour to conclude OECD model agreements with Poland, the Netherlands and Denmark in the foreseeable future.

Merz added that negotiations were being dealt with post haste but warned against countries expecting further concessions. Merz emphasized that Switzerland would only offer concessions where the same was offered in return, welcoming particularly better access for Swiss insurance firms in partner countries. The Swiss Finance Minister did, as ever, rule out concessions on the country’s banking secrecy regime, reaffirming that Switzerland would offer assistance in cases with conclusive evidence, not ‘fishing expeditions’.

In April, 2009, Switzerland announced that it is to include Poland in the list of fourteen countries with which it plans to conclude OECD model double taxation agreements. It is understood following Swiss Vice-President Doris Leuthard’s visit to Warsaw, that an agreement with Poland is foreseen in the near future. Swiss President Hans-Rudolf Merz confirmed Poland, Japan and the US’s position at the forefront of Switzerland’s plans to conclude OECD standard agreements with fourteen interested OECD member states after a cabinet meeting on April 8.

Switzerland and the US are to begin negotiations on a revised double tax treaty on April 28. Switzerland is expected to conclude its first OECD model agreement with Japan as negotiations are currently at an ‘advanced stage’. Switzerland's first revised double agreement will be subject to an optional referendum as announced by the Federal Council on April 8, 2009. Negotiations were expected to begin on April 28 in Berne, Switzerland.

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Switzerland Table of Treaty Rates

The rates shown are those of withholding taxes applied to payments made by Swiss entities or persons to non-resident entities or persons; a zero rate applies to royalties.

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Switzerland Other International Agreements

Switzerland has passed its own mutual assistance law, and is also a party to a number of international mutual assistance treaties, some multilateral and some bilateral, including the following:

• The European Convention on Mutual Assistance in Criminal Matters, 1959;
• Treaty on Mutual Assistance in Criminal Matters with the USA, 1973;
• The Federal Act on International Mutual Assistance in Criminal Matters, 1983, as amended in 1997;
• The European Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime, 1993.

The Federal Act, particularly since the 1997 amendments, enables the transmission of documents and information abroad for the purposes of criminal proceedings. From the point of view of banking secrecy the following can be said about the current According to a recent decision of the Federal Supreme Court the transmission of such information requires the permission of the Swiss police authorities who must inform the customer about the order and give him a right to appeal;

It is not permitted to forward information on persons who are not the subject matter of the investigation;

Information will not be given if

• The foreign authorities might use the information for purposes other than those for which it was requested;
• The offence alleged is not equally punishable in Switzerland;
• The requesting state does not offer Switzerland reciprocal treatment in these matters;

The offence is related to tax, politics or military matters.

The Swiss authorities now grant administrative assistance as well as judicial assistance. Administrative assistance is regulator to regulator contact as opposed to judicial assistance which takes place between judicial authorities within the scope of civil or criminal legal proceedings.

The Swiss Federal Banking Commission which regulates banks, mutual funds, stock exchanges and security dealers is the regulator charged with rendering administrative assistance. A number of conditions attach to the granting of administrative assistance by the Swiss Federal Banking Commission namely:

• The foreign authority must be recognized by the Commission as a supervisory authority authorized to request administrative assistance;
• The foreign authority may only use the information for the purposes of direct supervision of the institution concerned;
• The foreign authority must be bound by official or professional secrecy;
• The foreign body can only re-transmit the information under very restrictive circumstances. This is called the principle of specificity and means that information that was given for the purposes of a criminal offence such as drug dealing cannot be used in proceedings for tax evasion. In practice the foreign authority must confirm that it will not so transmit the information unless required to do so by a competent court against whose decision it will appeal. Since the grant of assistance by the commission is discretionary if specificity cannot or was not guaranteed future assistance may be denied though in practice the commission is always eager to be seeing to play its part;
• If the information requested gives the name of a client he must be notitfied and given time to contest the decision;
• There is a right of appeal to the Federal Supreme Court.

In 2001 the European Union began negotiations with Switzerland to attempt to gain agreement to the information-sharing required as part of the EU's withholding tax directive and without which it will not be effective.

Switzerland was politely helpful, offering to extend its 35% withholding tax on resident savings income to non-resident account holders, and to distribute much of the tax collected among EU member states, but the government was adamant that it will not shift on the issue of banking secrecy. The Finance Minister, Kaspar Villiger confirmed this, commenting frequently that: 'Banking secrecy is not negotiable'.

Jean-Baptiste Zufferey, a Swiss tax expert and professor at the University of Fribourg expressed the situation more bluntly: 'It's not because we fear banks would lose business, but most Swiss people have an attachment to the idea that a human being is entitled to financial privacy. It is the problem of foreign countries if they cannot tax their citizens. We in Switzerland don't have to help other countries do their job.'

This posed a serious problem for the EU - not just because the alpine jurisdiction is home to an estimated one third of the world's offshore wealth, but because other countries, in particular Luxembourg and Austria, had said that they would refuse to back information exchange plans if Switzerland does not participate. The EU had set the end of 2002 as the deadline for final adoption of its information exchange plans, but Luxembourg's refusal to accept the Swiss compromise position as acceptable meant that negotiations continued into 2003. After last-minute haggling by Italy and Belgium, it was agreed by mid-2003 that the Directive would enter into force in 2005.

In January, 2004, Switzerland and the Organisation for Economic Co-operation and Development reached a long-awaited compromise deal over certain Swiss tax practices deemed harmful by the OECD. Following two days of discussions with the Paris-based organisation’s fiscal affairs committee, Swiss officials agreed to exchange information with other countries on Swiss holding companies, one of a number of issues that has dogged the relationship between Switzerland and the OECD in recent years.

The two parties also managed to resolve another sticking point involving the issue of administrative notes on how taxable profits are defined by firms. But a third tax issue concerned with the method by which commercial expenses are deducted from tax statements remains unresolved.

Further agreement was reached, however, in the area of transfer-pricing, and the Swiss authorities have agreed to warn domestic firms to abide by OECD guidelines when transferring profits to subsidiary companies.

It has also emerged that the OECD is to undertake further analysis of the tax regimes under which Swiss finance and leasing companies operate.

In May, 2004, agreement was provisionally reached with Switzerland over the implementation of the EU Savings Tax Directive. The Swiss government had agreed the text of the Directive, but refused to sign it until assurances were given by the European authorities that the Schengen agreement on cross-border crime would not force it to compromise its banking secrecy by reporting on tax evasion, which is not a crime in Switzerland.

The agreed compromise is that Switzerland will provide legal assistance under the terms of the Schengen agreement in cases relating to indirect taxes such as customs, VAT, and alcohol and tobacco levies, but will be exempted from providing such assistances in cases of direct taxation.

Later in the month, representatives from Switzerland and the European Union signed the nine 'bilaterals II' agreements covering various topics including tax and the free movement of people. They had been held up pending agreement on the Savings Tax Directive.

The agreements concern: the taxation of savings; co-operation in the fight against fraud; the association of Switzerland to the Schengen acquis; participation of Switzerland in the “Dublin” and “Eurodac” regulations; trade in processed agricultural products; Swiss participation in the European Environment Agency and European Environment Information & Observation Network (EIONET); statistical co-operation; Swiss participation in the Media plus and Media training programs; and the avoidance of double taxation for pensioners of the Community institutions.

A protocol to the existing agreement on the free movement of persons was also signed, extending the agreement to the new EU Member States.

Right wing parties such as the Swiss People's Party, opposed to the plans to cooperate more closely with Brussels on security and other matters, threatened to force a referendum on the issue, but by November it was clear that the government was going to be able to put through the necessary implementing legislation with needing a referendum, and the Savings Tax Directive duly came into force in July, 2005, with Switzerland applying a 15% withholding tax to the returns on savings of EU residents.

The new Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters between the the European Commission and certain member states of the European Free Trade Area, which includes Switzerland, was signed on October 30, 2007.

The new agreement aims to align the Convention provisions with the present European Community legal framework. As a result of it, the rules for determining jurisdiction of the courts will now be similar in the EU and the EFTA States concerned. Moreover, the judgments delivered by EU national courts and those of EFTA Member States will be more easily recognised and enforced.

In November 2007, The Swiss Federal Council approved bilateral framework agreements with the eight European Union member states which acceded to the EU in 2004.

It was announced at the end of 2007, that Switzerland had given Malta EUR1.8 million, under the bilateral agreement which implements Switzerland’s undertaking to provide cohesion funds to the new member states of the EU, following its access to the EU internal market.

The individual bilateral agreements by Switzerland with the ten EU member states which joined in 2004 followed the Memorandum of Understanding (MoU) signed between Switzerland and the Council of the European Union in February 2006.

This MoU contained the overall conditions and modalities agreed between Switzerland and the EU for a financial contribution by Switzerland as a compensatory measure to the latter’s participation in the economic and social dimensions of the EU internal market.

An agreement between the Swiss Confederation and the Kingdom of Saudi Arabia on the Encouragement and Reciprocal Protection of Investments entered into force on August 9, 2008.

The core of the agreement lies in the commitment of each contracting party to protect and promote in its territory investments of investors of the other contracting party and in particular to provide these investments National Treatment and Most Favoured Nation Treatment.

An "investment" is defined broadly under the agreement and means every kind of asset invested in accordance with the national laws of the destination country of the investment. In addition, both countries are committed to permit investors of the other country free transfer of payments in connection with an investment.

The agreement also provides elaborate dispute settlement mechanisms in case of disputes between an investor and the host contracting party as well as between the two contracting parties.

The Intellectual Property Office of Singapore (IPOS) and the Swiss Federal Institute of Intellectual Property (IGE) signed a Memorandum of Understanding (MOU) on bilateral co-operation in September 2008.

The signing ceremony, which took place at the 45th World Intellectual Property Organization (WIPO) General Assembly in Geneva marks the start of enhanced cooperation between the two Offices.

The MOU establishes a formalised framework to promote greater co-operation and information sharing between IPOS and IGE. It creates a platform to foster greater interaction between the IP Offices and opens up more opportunities for organising joint projects in areas of mutual interest.

“We are very happy to partner IGE to share knowledge and increase the awareness of IP. We would like to explore further collaborative opportunities with our Swiss partner, particularly in IP capability development, IP awareness as well as IP searches and information services.” commented Ms Liew Woon Yin, Director-General of IPOS.

Mr Felix Addor, Deputy Director General of the Swiss Federal Institute of Intellectual Property added:

“This will strengthen ties between both our IP offices to further facilitate and enhance collaborative efforts, particularly in the sharing of knowledge and experiences, as well as joint activities at the national and international level."

On October 10, 2008, Federal Councillor Doris Leuthard and then US Trade Representative Susan Schwab signed a joint declaration on e-commerce in Washington, D.C. The declaration envisages cooperation between Switzerland and the USA with a view to improving trade conditions for e-commerce.

In the joint declaration, Switzerland and the USA state their intention to facilitate and encourage electronic commerce, prevent discriminatory measures, guarantee users a higher degree of legal certainty and establish the necessary climate of trust and confidence for electronic transactions. The two parties declare their desire to work together in this regard within the World Trade Organisation and other relevant international organisations, as well as to continue their cooperation at the bilateral level.

This joint declaration on e-commerce was developed under the Swiss-US Cooperation Forum on Trade and Investment.

Venezuela's Vice Foreign Minister visited Switzerland in November 2008 to discuss tackling trade barriers and bilateral investment, and to sign an economic agreement between the two countries.

The framework agreement will form the basis for the further development of bilateral economic relations and for the participation of Swiss firms in projects in Venezuela. It proposes the creation of a mixed committee to serve as a platform for bilateral dialogue on economic affairs. The aim of the committee is to promote co-operation between the two countries in areas relevant to business and to discuss and tackle jointly possible barriers to trade and investment with the involvement of the private sector.

The Swiss Federal Department of Economic Affairs announced in January 2009 that discussions would be launched later that year with China to examine the feasibility of a bilateral free trade agreement.

President Hans-Rudolf Merz received the Chinese Prime Minister Wen Jiabao on an official working visit on January 27 to discuss bilateral economic cooperation. It was agreed that a Swiss-Chinese working group on the feasibility of an FTA should begin work in the second half of 2009 with the aim of deciding on the commencement of negotiations at the earliest opportunity.

A new bilateral investment protection agreement was signed during the meeting. This new agreement replaces the existing one from 1986, which is now outdated.

Talks with China for a bilateral free trade agreement began on January 28, 2011. Chinese Commerce Minister Cheng Deming said a free trade agreement would enhance mutual trust between the two sides and promote economic development and closer ties between China and Switzerland.

Vietnamese Deputy Prime Minister Nguyen Thien Nhan and Swiss Vice President and Minister of Economics Loris Leuthard met on January 29, 2009, to discuss the possibility of a free trade agreement between their respective countries.

Leuthard asked Vietnam to consider the possibility of a free trade agreement with the European Free Trade Area which consists of Switzerland, Norway, Iceland and Lichtenstein, also proposing an air route between Switzerland and Vietnam to further boost investment and tourist cooperation between the two countries.

A visit by the Tajik Foreign Minister, Hamrokhon Zarifi, in March 2011, included talks with the Swiss President Micheline Calmy-Rey on the development of political and economic cooperation.

The European Council Secretariat on February 24, 2009, published provisional details of an anti-fraud agreement between European Union Member States and Switzerland.

The anti-fraud agreement's aim is to counter fraud and other illegal activities affecting the financial interests of both the EU and Switzerland. It contains provisions relating to administrative assistance and to mutual legal assistance in criminal matters for the protection of financial interests. Within the scope of the agreement are indirect tax (VAT and excise duties) and customs offences (including smuggling), corruption and money laundering. Direct taxation is excluded from the scope of the agreement.

A press release by the EU council on February 15, 2011, announced that an initial debate had taken place on a draft decision which authorises the Commission to negotiate a new anti-fraud agreement with Swizerland. A draft agreement with Liechtenstein which "provides for cooperation between parties through the exchange of information that is foreseeably relevant to tax administrations. It allows the parties to trigger administrative assistance that cannot be refused on the sole grounds that the information is held by a bank or other financial institution, and legal assistance for acts that are punishable under the laws of the parties", is planned to serve as the model for the new negotiations.

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