Switzerland - unlike the UK, for example - does not consider tax evasion to be a crime, which is one of the reasons Swiss banking secrecy laws have become world famous. Tax fraud, which includes actions such as falsifying documents, is, however, considered a criminal act.

Far from a “done deal”

At the time of publication, none of the DTAs conforming to the OECD standard have been signed into Swiss law yet, and while they are at different stages of the implementation process, they will all still have to pass the National Council, the lower house of the Swiss parliament. In June this year, the chamber will discuss the DTAs between Switzerland and the US, UK, France, Denmark and Mexico, the first such agreements to be discussed in the chamber.

The greatest opposition to these DTAs will come from the right-leaning Swiss People’s Party (SVP), which, with 62 out of 200 seats, has the most members in the National Council, but no majority.

A fierce critic of the DTAs, SVP MP Hans Fehr, told WealthBriefing that because the agreements are contrary to the principle of double criminality - which states that a foreign state can only ask Switzerland for administrative assistance in cases which are illegal in both countries - his party will try to block the agreements in parliament. If that fails, the party will try to call a popular referendum.

“The pressure put on Switzerland from abroad is unbelievable, as is the way our government capitulates to this pressure,” Fehr said.

Article 26 of the OECD standard regulates administrative assistance and states that the contracting jurisdictions must hand over tax information that is “foreseeably relevant for carrying out the provisions of this convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the contracting states.”

The provision that the information must be “foreseeably relevant” is of particular importance, as it appears to forbid what are commonly referred to as “fishing expeditions”. Switzerland will only have to provide administrative assistance in individual cases where the taxable person as well as their bank have been clearly identified.

Divided opinion

Opinions on whether the agreements should be implemented are split. Michel Dérobert, secretary general of the Swiss Private Bankers Association said: “The DTAs will presumably not be very harmful. They will be implemented by all jurisdictions, including Luxembourg, Singapore, yet.”

No matter what the outcome of these attempts to prevent the implementation of the DTAs will be, Switzerland has already said that it will not grant administrative assistance in cases of stolen bank data. This comes after some jurisdictions, most recently the German state of North-Rheine Westphalia, have acquired disks with data on clients alleged to be engaged in tax evasion. Nevertheless, Dérobert does not believe that the new DTAs will make states stop this legally questionable behaviour.

Although Switzerland has not signed the DTAs into law yet, it has initialled 12 OECD-conformist agreements and so has already secured a place on the OECD’s “whitelist” of jurisdictions deemed to have substantially implemented the international standard in matters of tax information exchange.