Changes to Swiss administrative assistance for tax evasion in Europe delayed

BERN, SWITZERLAND – Proposed legislation to change Swiss law, bringing it more into line with European law  in the area of tax evasion administrative assistance, is being delayed after the proposals came under heavy criticism on a variety of points. The legal changes were put out for consultation with concerned parties, as is typically done in Switzerland. The level of criticism was so high, says the Federal Council, that it will have to be delayed until another consultation, over proposed changes to the penal code covering tax law, in order to coordinate the two.

The delay will also allow the revisions to take into account the latest recommendations of Gavi, the international body that oversees the fight against money laundering.

The penal code covering tax law will be put out for consultation in coming weeks.

The volley of criticism centred around two areas: that the law could not realistically be implemented because it is so at odds with other Swiss tax legislation, and it goes too far in a number of areas, allowing other countries to make demands that are not allowed under national law. In particular, objections were voiced to the proposals going well beyond the stated original goals, extending administrative assistance to extradition, methods used to obtain proof, delegating criminal prosecution and delegating decisions about penalties impossed.

Swiss tax officials, who deal with tax evasion as opposed to tax fraud, which is handled by judicial authorities, are not competent under current law to carry out some of the measures under the proposed administrative assistance changes, as an example, the Federal Council says. Tax officials cannot, for example, demand bank account information, which judicial authorities, under tightly defined regulations, may.