14 November, 2022
Echoing applications it made in February of 2021, the Israeli Tax Authority (ITA) has recently submitted two more lists of names of Israeli citizens to the Swiss Federal Tax Administration (FTA) requesting information in connection with Swiss bank accounts and assets held both personally and through foreign companies. Although the timeframe for submission of the request to review and be heard is ten days from the date of publication of the list, there appears to be some flexibility if an appointed Swiss agent contacts the FTA before the FTA has complied with the ITA request.
This relatively new and proactive approach by the ITA might be partly the result of the implementation of the Automatic Exchange of Information agreement between Switzerland and Israel. In some cases, individuals may not even have been aware that they were account holders or beneficiaries of structures set in place by, for example, a parent or grandparent. In other cases, there may be discrepancies between values reported to the Israel Tax Authority by the individual, and what appears in CRS reporting – discrepancies that require explaining. However, unlike CRS reporting, these requests are made pursuant to the double tax treaty signed between Israel and Switzerland in 2003 and can elicit much more detailed account information over extended periods of time, even where an account has been closed.
If your clients’ names, or those of beneficiaries of structures put in place by your clients appear on the list, they will certainly have an interest in knowing more about the nature of and grounds for the request for information. Depending on the basis for the ITA request, there may be good grounds to oppose compliance by the FTA, provided that such opposition is filed before the FTA resolves to share information with the ITA. One can also choose to appeal any formal decision to exchange his or her information in a Swiss court of law within 30 days of the FTA’s formal decision.
No matter what the reason for the appearance of a name on the list, we strongly advise that you take action as soon as possible. The registration of a Swiss legal representative will ensure that information is shared only through the representative, rather than being made available to the public. It also provides the opportunity to consider possible challenges to the request.
Our firm’s Tax Department, located both in Tel Aviv and Zurich, has vast experience in dealing with such matters, preparation for ITA inspections, and handling information requests. We encourage you to reach out to us for more information, by contacting one of the tax partners listed below.
For any questions or clarifications on the issues listed in this memorandum, you can contact your contacts at our office or: