Switzerland will provide the Russian Federal Tax Service with information within the automatic exchange of tax information for the first time

The Swiss Federal Council confirmed that in September 2019, the Swiss Confederation will exchange tax information under the CRS (Common Reporting Standard) for the first time with 38 jurisdictions under the automatic exchange (AEOI, Automatic Exchange Of Information).

In particular, Switzerland will automatically exchange tax information with Russia, as well as Andorra, Liechtenstein, Monaco, Saudi Arabia, South Africa, China, Hong Kong, Singapore, Argentina, Brazil, Colombia, Uruguay, New Zealand and other countries, including offshore jurisdictions such as the Seychelles, Belize, Saint Kitts and Nevis, and the British Virgin Islands.

Despite the fact that Russia and Switzerland have been negotiating automatic exchange since 2017, the first wave of exchange will occur only now due to the fact that the Swiss Federal Department of Finance (EFD) did not recommend exchanging data with the Russian Federation due to the high level of corruption and insufficient protection of personal data.

Nevertheless, as follows from the report, as of today, the national legislation of Russia guarantees generally accepted minimum standards for modern data protection, and Russia is also a member of the Council of Europe Convention on Data Protection. Thus, so far there are no justified negative reviews from other countries, individuals or companies, according to which Russia would commit significant violations in the field of data protection.

It should be noted that despite the fact that Russia has about 100 partner countries in the framework of the automatic exchange of tax information (including major financial centers such as Singapore, the UK, Hong Kong, Switzerland), according to the report of the Federal Department of Finance, only 14 countries really exchange information automatically with the Russian Federation. For example, the UK has not submitted data to Russia since 2019, despite the agreement on the exchange of tax information and the activation of CRS protocols between Moscow and London.

Nevertheless, despite the small list of countries exchanging tax information with Russia, the Swiss Federal Department of Finance noted that Russia has ensured the effective implementation of the standardized procedures necessary to activate automatic exchange.

Russia, as noted in the Swiss report, will use the data received solely for tax purposes and will not risk being excluded from participating in an automatic exchange for violations of the storage and processing of the received data, which are known to be a tax secret.

The Swiss Federal Department of Finance drew attention to the capital amnesty programs that exist in Russia, which allow Russian taxpayers to voluntarily disclose their foreign assets (including accounts and companies) without the threat of criminal prosecution.