On 7 November 2018, the Federal Council decided to remove the transitional provision concerning the term "participating state" in the Ordinance on the International Automatic Exchange of Information in Tax Matters with effect from 1 January 2019.
Background. According to the definition of the standard on the automatic exchange of information (AEOI), a participating state is a state with which an AEOI agreement exists. Financial institutions have enhanced due diligence requirements vis-à-vis non-participating states. When the OECD introduced the AEOI, it was decided that states could include a transitional provision in their national law according to which participating states are also deemed to be states that have undertaken to implement the AEOI. The reason for this is that the AEOI will not be introduced by all states at the same time. Instead, the AEOI agreement network will be gradually expanded. The transitional provision was intended to reduce the financial institutions' burden during the introductory phase of the AEOI. More than 100 states and territories, including Switzerland, have since introduced the AEOI and expanded their agreement network. Against this backdrop, the OECD called on the states in autumn 2017 to remove the transitional provision. Switzerland made use of this transitional provision, which will cease to apply with effect from 1 January 2019.