Switzerland CARF – Introduction
From 2026, the international automatic exchange of information (AEOI) will extend to crypto assets, introducing a significant shift in global tax transparency efforts.
Switzerland, a prominent global financial hub, has thrown its support behind this initiative, signalling a commitment to maintaining its status as a leader in international tax compliance.
In this article, we explore the background, framework, and implications of this development.
Background and Content
The Organisation for Economic Co-operation and Development (OECD) first introduced the concept of automatic exchange of information for digital assets in 2022 through the Crypto Asset Reporting Framework (CARF).
By the end of 2023, Switzerland endorsed this framework, underlining its dedication to creating a level playing field for financial and crypto assets.
The primary goal of CARF is to enhance tax transparency and ensure equitable treatment between traditional financial products and crypto assets.
Switzerland’s approval reinforces its role in upholding international tax standards and bolsters its reputation as a credible financial centre.
The implementation timeline for CARF is set to begin in early 2026, with the first exchange of data scheduled for 2027.
However, for this to happen, Swiss federal laws and regulations on AEOI will need amendments.
Legislative Steps
- Consultation Phase: In May 2024, the Swiss Federal Council launched a consultation to expand AEOI to include crypto assets.
- Defining Partner States: In August 2024, a further consultation focused on selecting partner states for crypto asset data exchange.
- Stakeholder Input: Comments from political parties, cantons, and stakeholders were collected until November 2024.
How the AEOI Will Work with Crypto Assets
The AEOI facilitates the regular, automatic exchange of tax-related information between countries. For crypto assets, this process will involve collecting data from crypto service providers, such as exchanges facilitating cryptocurrency transactions. These providers must report detailed information, including:
- The identity of the user (natural or legal persons).
- Details of the transactions, including the beneficial owners of crypto assets.
Compliance and Enforcement
Crypto service providers will be required to comply with due diligence obligations under CARF. These obligations include verifying user identities and gathering necessary information to meet reporting standards. Failure to comply can result in fines, reinforcing the importance of adherence to these regulations.
Partner States
Switzerland’s approach to sharing data with partner states mirrors the method used for financial account AEOI.
Partner states must commit to implementing CARF, demonstrate relevance to the crypto sector, or adopt a crypto-friendly stance.
Switzerland maintains the authority to determine which states qualify for data exchange and the start date for exchanges.
This cautious approach ensures that the benefits of the AEOI are balanced with the need to protect sensitive data.
Data Protection
Data security and confidentiality are central to the AEOI framework.
The Global Forum on Transparency and Exchange of Information for Tax Purposes evaluates the data protection standards of potential partner states.
Only states meeting these standards are eligible for data exchange.
In cases where a partner state’s data protection is deemed inadequate, data sharing may still proceed under specific conditions, such as when an international treaty guarantees adequate safeguards.
Switzerland enforces stringent requirements to ensure partner states respect Swiss data protection standards in bilateral exchanges.
Switzerland CARF – Conclusion
The introduction of the automatic exchange of information (AEOI) for crypto assets represents a significant leap toward greater tax transparency.
By supporting this initiative, Switzerland underscores its role as a leader in global financial governance while aligning crypto assets with established tax compliance frameworks.
Although implementation requires legislative changes and careful selection of partner states, the CARF framework is set to ensure equitable treatment and accountability in the rapidly evolving crypto sector.
Final Thoughts
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