On November 27, 2016, Israel and Switzerland signed a joint declaration committing to implement the automatic exchange of financial account information (AEOI). The joint declaration (the Israeli-Swiss AEOI Declaration) was signed by Moshe Asher, director of the Israel Tax Authority, and Joerg Gasser, Swiss state secretary for international financial matters, on behalf of their respective governments.
Israeli-Swiss AEOI Declaration Will Follow CRS
The Israeli-Swiss AEOI Declaration states that AEOI will be based on the Multilateral Convention on Mutual Administrative Assistance in Tax Matters of 25 January 1988, as amended by the Protocol of 27 May 2010, and subject to the signing of the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA). The information subject to exchange will be collected according to the Common Reporting Standard (CRS) adopted by OECD.
The MCAA is based on the international standard for the exchange of information developed by the OECD. The OECD first introduced the standard in February of 2014; the standard was later approved in November of 2015 by the G-20 leaders during their summit in Brisbane, Australia.
Israeli-Swiss AEOI Declaration Sets Forth the Implementation Time Frame
The Israeli and Swiss governments committed to start collecting the CRS-required data in 2018. The actual transmission of data will commence in 2019 and continue onwards.
Israeli-Swiss AEOI Declaration Foresees Voluntary Disclosure Coordination
The Israeli-Swiss AEOI Declaration commits both countries to inform each other about their respective voluntary disclosure programs (i.e. the voluntary disclosures by their citizens of their financial assets). The stated aim is to provide a smooth transition to the AEOI.
Implications of Israeli-Swiss AEOI Declaration for US Taxpayers
The signing of the Israeli-Swiss AEOI Declaration further increases the already high probability of the IRS detection of noncompliant US taxpayers with undisclosed offshore assets in these countries. As financial institutions review their client data, there is an increased probability that they may encounter that some of their taxpayers are US taxpayers whose information needs to be reported to the IRS under FATCA.
Furthermore, under the Israeli-Swiss AEOI Declaration, both countries agree to cooperate with respect to their voluntary disclosure programs. Under these circumstances, it is possible that more information than usual will be revealed during these voluntary disclosures and exchanged between the countries; some of that information may be disclosed to the IRS.
Contact Sherayzen Law Office for Help With the IRS Voluntary Disclosure of Your Undisclosed Foreign Assets and Foreign Income
If you are a US tax resident with undisclosed assets in Israel and/or Switzerland, contact Sherayzen Law Office for help with your IRS voluntary disclosure of these assets as soon as possible. In today’s FATCA-dominated world, the probability that the information regarding your undisclosed assets will be detected by the IRS has increased exponentially. The additional information exchange agreements, such as the recent Israeli-Swiss AEOI Declaration, only make this probability higher. At this point, a US tax resident with undisclosed assets in Israel and Switzerland is running an unacceptably high risk of IRS detection that may result in the imposition of high IRS penalties, including criminal penalties.
Sherayzen Law Office is a leading international tax firm in the area of IRS voluntary disclosure of offshore assets and income. We have helped hundreds of US taxpayers with assets around the globe to bring their tax affairs into full compliance with US tax laws, and we can help you!