The Swiss Federal Council has halted its automatic exchange of information (AEOI) agreement with Bulgaria.
The move follows a problem with data security in the Eastern European country in July 2019, when a leak exposed financial account information of four million Bulgarians and foreign taxpayers.
Although the Bulgarian National Revenue Agency was hacked, the Swiss databases were not affected.
“In accordance with the Federal Act on the International Automatic Exchange of Information on Tax Matters (AEIA), the Federal Council had to formally approve the suspension of the exchange of data with Bulgaria,” said the Swiss state secretariat for international finance.
“The Federal Tax Administration (FTA) will therefore not provide the Bulgarian tax authorities with 2018 financial account data supplied to it by the Swiss financial institutions at the end of September 2019.”
Fix and resume
“Individuals with tax residence in Switzerland holding financial accounts in Bulgaria and individuals with tax residence in Bulgaria with financial accounts in Switzerland were affected by the disruption,” the state secretariat added.
The first automatic exchange between the two countries took place in 2018, after Switzerland passed its domestic AEOI legislation in 2017.
The agreement will be resumed once Bulgaria solves its data security issue and takes corrective measure that will have to be validated by the Global Forum on Transparency and Exchange of Information for Tax Purposes.
But Bulgaria is not the only country Switzerland shares information with.
International Adviser reported on 7 October 2019, that it started exchanging information about non-resident Indians with the south Asian country.
To date, Switzerland has sent information on 3.1 million financial accounts to its partner states, and has received data on around 2.4 million of them.
