On November 23 2015 Switzerland and Brazil signed a tax information exchange agreement. The tax information exchange agreement with Brazil – the 10th such agreement entered into by Switzerland – establishes the rules on the exchange of information on request concerning tax matters.(1)

Alternative to double tax treaty

On April 4 2012 the Federal Council decided to implement international administrative assistance on tax matters not only through double tax treaties, but also through tax information exchange agreements. As opposed to double tax treaties, which aim primarily to avoid double taxation, tax information exchange agreements merely set rules regarding the information exchange on request between two countries on tax matters.

Tax information exchange agreement with Brazil

The tax information exchange agreement with Brazil was signed as a first step towards deeper cooperation on tax matters between the two countries, which could ideally result in the signing of a double tax treaty. Switzerland has been permanently removed from Brazil's black list of countries with insufficient exchange of tax-related information. This grants Swiss companies doing business in Brazil more legal certainty and greater investment security.

The tax information exchange agreement with Brazil covers the exchange of tax-related information on request, excluding automatic or spontaneous exchanges of information. Subject of the agreement – from a Swiss perspective – are taxes on income and capital as well as gift and inheritance taxes.

The tax information exchange agreement must be approved by the legislative bodies of both countries in order to come into force. In Switzerland, it is also subject to an optional referendum. Once approval has been granted, the tax information exchange agreement applies to information regarding the tax period starting on January 1 the following year. If approval is granted in both Switzerland and Brazil in 2016 and no referendum occurs, the tax information exchange agreement would be applicable to information regarding tax periods starting on or after January 1 2017. This is thus the earliest possible starting date.

For further information on this topic please contact David Brönimann at Meyerlustenberger Lachenal by telephone (+41 44 396 91 91) or email (david.broenimann@mll-legal.com).The Meyerlustenberger Lachenal website can be accessed at www.mll-legal.com.

Endnotes

(1) The tax information exchange agreements entered into by Switzerland with Andorra, Greenland, Guernsey, the Isle of Man, Jersey, San Marino and the Seychelles are already in force. The tax information exchange agreements with Belize and Grenada have been signed, but are not yet in force.

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