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News & Knowledge

FATCA: How to avoid penalty sanctions

18th August 2017
Gfeller + Partner AG

MSI's Swiss accounting member Gfeller + Partner AG provides relevant information on FATCA tax disclosures and how MSI members’ national and international clients can get fully FATCA compliant and subsequently avoid heavy penalty sanctions.

Cross-border tax evasion is foreseen as being prevented with the help of the new global standard for the Automatic Exchange of Information (AEOI). AEOI is an international standard that governs how tax authorities in the participating countries exchange data relating to the bank and safekeeping accounts of taxpayers. The goal thereof is to make tax evasion impossible. The member countries of the G20, the OECD and other important financial centres, total over 100 jurisdictions, and have committed to implementing AEOI.

The US has already implemented its own standard Foreign Account Tax Compliance Act (FATCA) a few years ago and is already applying an automatic data exchange with the Swiss banks. In other words, Swiss banks already provide bank data to the USA on an annual basis. Swiss Federal Council has so far adopted the dispatch on the introduction of the AEOI with 41 states and territories. Implementation is planned for 2018, and the first sets of data (back to 2017) should be exchanged in 2019.

Considering the fact that criminal prosecution due to non-reporting is linked to heavy penalties, it is recommended to have undisclosed assets “cleaned up” before any data is automatically provided to a foreign state. Current action is mainly required for US persons since the FATCA rules entered into force and the information exchange is already in place, in particular since a penalty free disclosure is currently available which may be revoked by the IRS at any time. It is therefore recommended to act as long as attractive disclosure procedures are available. As for the AEOI, disclosure before 2018 is recommended. Some states currently provide low penalty disclosures which may likely disappear as soon as the AEOI is in place.

Gfeller + Partner AG with its long term experience related to national and international tax disclosures can assist MSI members’ national and international clients to obtain the relevant information from the Swiss banks and authorities, in order to get full compliance and subsequently to avoid heavy penalty sanctions.

About Gfeller + Partner AG - Bern

Gfeller + Partner AG is a partner owned audit, accounting and tax firm located in Berne and Langenthal, serving clients all over Switzerland.

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