EU strengthens international tax cooperation with Switzerland

The European Union has taken a significant step in its ongoing efforts to improve international tax compliance and combat tax fraud and evasion. On 20 October, the EU signed an amending protocol to strengthen the existing tax cooperation agreement with Switzerland. This protocol aligns the agreement with recent EU and international standards by expanding automatic exchanges of financial account information and establishing a new framework for cooperation on the recovery of Value-Added Tax (VAT) claims.

Significant updates to increase tax compliance

The amending protocol expands the automatic exchange of financial account information, in line with the updated Common Reporting Standard (CRS) agreed at international level. This update includes specific electronic money products and central bank digital currencies, ensuring that tax authorities have comprehensive access to relevant financial data. Additionally, the protocol strengthens due diligence and reporting requirements, facilitating more effective use of information by tax administrations while limiting burdens on financial institutions.

The amending protocol also establishes a new framework for cooperation on the recovery of VAT claims and commits both parties to explore mutual assistance in recovering other tax claims, further enhancing tax cooperation. These amendments are a crucial development that will help prevent tax fraud and evasion and ensure a level playing field between the EU and Switzerland, given their significant economic ties.

Broader implications and future steps

The amendments signed with Switzerland follow similar protocols with Andorra, Liechtenstein, Monaco, and San Marino. These protocols are expected to enter into force on 1 January 2026, following the completion of the respective ratification procedures. The amendments with Switzerland related to the CRS updates are expected to apply provisionally from 1 January 2026, with the new provisions on tax recovery taking effect from the first day of January of the first year after the protocol's entry into force.

Background

Between 2015 and 2016, the EU signed agreements with Andorra, Liechtenstein, Monaco, San Marino and Switzerland which provides for the reciprocal automatic exchange of information on financial accounts. The agreements reflect the OECD's CRS, which the EU implemented through the Directive on Administrative Cooperation (DAC). In 2022, updates to the CRS necessitated the revision of these agreements. 

In May 2024, the Council mandated the Commission to start negotiations with the five countries, and on 10 October 2025, the Council unanimously approved the proposals to authorise the Commission to sign the amending protocols (on behalf of the EU). 

More information:

• Council Decisions on the signing of the Amending Protocols to the Agreements between the EU and Switzerland, Liechtenstein, Andorra, Monaco and San Marino on the automatic exchange of financial account information to improve international tax compliance
• DAC8 - Taxation and Customs Union
• Directive on administrative cooperation DAC