Israeli Tax Authority actively approaches Switzerland to obtain information

Monday 2 August 2021

Inbal Faibish Wassmer
Goldfarb Seligman, Tel Aviv

In July, the Israeli Tax Authority (ITA) requested information from the Swiss Federal Tax Administration (FTA) on affluent Israelis and their families in connection with bank accounts and assets held by them in Switzerland, individually and through foreign companies.

This step joins other recent actions taken by the ITA in an attempt to locate the assets of affluent Israelis abroad, including a flurry of requests for capital declarations from many trusts and investigations into existing tax arrangements.

The ITA’s inspection is not necessarily focused on criminal tax evaders. It is part of a series of inspections conducted by the ITA on the grounds that activities abroad, which previously have not been taxed in Israel, are now taxable.

Generally, when the ITA approaches the FTA and asks to receive information based on the double tax treaty signed between Switzerland and Israel on 2003, the FTA diligently reviews the application and makes a decision on whether to accept it or not. Information requested and exchanged in such cases is much more detailed than the information automatically exchanged between the countries and can cover a longer period, including closed accounts.

It appears that the FTA has already started to collect information. As part of the process, it has published in its official gazette a list of names, along with the dates of birth of individuals and date of incorporation for companies. It is highly probable that the published list is not conclusive, and the ITA application includes additional names that were not published to date.

The official deadline for submitting requests to the FTA lapsed on 27 February. However, it appears that it may still be possible for individuals and companies to join the process.

Every applicant who joins the process before a decision is taken by the FTA may have access to the ITA’s original application, and information in connection with the said applicant will not be publicly shared with anyone except the local representative.

If one does not manage to join the process before the FTA makes a decision, then it may be possible to file, within 30 days of the FTA deciding to share the information, an appeal asking that information on a specific person or company is not shared. Such an appeal will enable clients to control information exchanged in connection to their specific matter and to better prepare for any possible future proceedings before the ITA.

We recommend reviewing the published list diligently and checking whether any known name appears. If so, you should consider the next steps.

Individuals and companies whose name does not appear on the list must refer to the recent publications as another indication of the proactive approach taken by the ITA to collect information on high net worth individuals, review past tax arrangements and conduct audits on high net worth assets held privately, through foreign trusts or corporations.