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Auto exchange costs set to soar warns ARIF chair

Auto exchange costs set to soar warns ARIF chair

New regulations and increased compliance costs are at the forefront of Swiss Independent Asset Managers' concerns.

Speaking in Geneva at a seminar on Common Reporting Standards (CRS), Norberto Birchler, director of financial intermediary association ARIF said the OECD’s Automatic Exchange of Information (AEI) is yet another step in the push against cross-border tax evasion by governments and international organisations, building upon the US Foreign Account Tax Compliance Act and the EU Savings Directive.

He added: 'Custodian banks bear the ultimate responsibility to report information to the Swiss tax authorities under the AEI. While unlike with FATCA, Independent asset managers' responsibility is not engaged, the exchange of information might still increase the compliance burden as banks could rely on their external asset managers to gather relevant information on account holders'.

Currently, 96 tax jurisdictions have committed to the automatic exchange of information, with different implementation calendars, while Switzerland is due to start collecting data in 2017 and start the first exchange of information in 2018 with participating countries.

Information exchanged by States on account holders will include the account number, the tax identification number, name, address, date of birth, all kind of income and the balance of the account.

Reporting financial institutions in Switzerland, including banks, securities dealers, insurance companies, collective investment schemes and trustees will be required to transmit relevant financial information on clients’ resident for tax purposes in another participating jurisdiction to the Swiss federal tax authority.

Attorney-at-law Michel Barbey from Borel & Barbey, the keynote speaker of the seminar, highlighted that while independent asset managers were not classified as reporting financial institutions in Switzerland for AEI purposes, other jurisdictions implementing the CRS could require them to report.

Custodian banks may delegate client account review to independent asset managers they work with in order to assess tax residence and identify clients who are reportable under the new standard.

Added to this the review of the pre-existing customer base can be problematic with legacy IT systems and accounts, and may require the introduction of new client on-boarding procedures to identify and monitor reportable accounts.

Norberto Birchler stressed that while the CRS is at a very advanced stage, its operational details are still being put in place and independent asset managers will have to keep a close eye on possible coming changes which could affect them.

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