CRS, FATCA and the end of discretion

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The automatic exchange of information has changed the market more profoundly than any tax provision. Under the Common Reporting Standard of the OECD, insurers that issue cash value insurance contracts or annuity contracts are reporting financial institutions. Since a cash value insurance contract is a financial account, the insurer must report the policyholder, the surrender value and, on payment, the recipient of the benefit to its tax authority, which forwards the information to the country of residence of the persons concerned. Where the policyholder is an entity, the controlling persons must be identified and reported.¹

Switzerland and Liechtenstein have exchanged information with the member states of the European Union since 2017, with the first exchange in 2018. As a result, a German resident holding a Liechtenstein policy can no longer expect that his tax authority will remain unaware of it. The American FATCA regime, which preceded the CRS, imposes comparable obligations on foreign insurers with American policyholders. Switzerland implemented FATCA under a Model 2 agreement, in which Swiss financial institutions report directly to the American authorities, and agreed to move to a reciprocal Model 1 agreement. The entry into force of the new agreement is foreseen for 2027.²

The end of discretion has transformed the wrapper from an instrument that was sometimes chosen because of its opacity into an instrument that is used for its legal effects in a fully transparent environment. Insurers now require the policyholder to confirm his tax compliance and often to provide evidence of it. Policies designed for the tax law of the policyholder's country of residence have become standard, so insurers decline policyholders resident in countries for which they have no compliant product.

Notes

OECD, Standard for Automatic Exchange of Financial Account Information in Tax Matters (2014, with later amendments including the 2023 amendments to the CRS), Section VIII on specified insurance companies and cash value insurance contracts. To be verified. ↩
On the automatic exchange of information in Switzerland, see the Federal Act on the International Automatic Exchange of Information in Tax Matters (AEOIA) and the agreement with the EU. On FATCA, see the Model 2 agreement of 14 February 2013 and the new Model 1 agreement signed in 2024. Date of entry into force to be verified. Status to be verified. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

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CRS, FATCA and the end of discretion

Notes

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