The U.S. Treasury Department said Thursday it signed a bilateral tax agreement with Switzerland, whose strict bank secrecy laws have long made it a destination for those seeking to stash funds overseas.
The agreement puts in place rules mandated under the Foreign Account Tax Compliance Act, or FATCA, which was signed into law in 2010. Final rules on the law were issued in January.
FATCA requires foreign financial institutions to start reporting detailed information about U.S. account holders to the Internal Revenue Service. It’s intended to help the government learn whether Americans are evading taxes by stashing their money overseas.
Switzerland is one of eight countries that have thus far signed or initialed a FATCA agreement with the U.S., Treasury said. Switzerland is the first country to sign an agreement based on the second model (pdf) issued by Treasury, which the department issued in November 2012, it said.