Non-punishable voluntary disclosure is a legal mechanism allowing a taxpayer who has failed to declare income or assets to regularise their tax position — notably in cases of tax evasion — without incurring criminal penalties. Introduced into federal law in 2010 for individuals (art. 175 para. 3 FITA) and extended to legal entities in 2013 (art. 181a FITA), this regime has become of considerable importance in the context of the end of Swiss bank secrecy and the introduction of the Automatic Exchange of Information (AEOI). PBM Avocats accompanies clients in Geneva and Lausanne in preparing and filing voluntary disclosure dossiers, ensuring strict compliance with the conditions of Swiss tax law.
Legal Conditions for Non-Punishable Voluntary Disclosure
Art. 175 para. 3 FITA (individuals) and art. 181a para. 1 FITA (legal entities) set four cumulative conditions for the non-punishable regime.
First condition — Spontaneity: the initiative must be voluntary and not prompted by an intervention from the tax authority. If the FTA or cantonal authority has already contacted the taxpayer on the items in question, the condition is not met.
Second condition — First disclosure: the taxpayer must never have benefited from this regime previously. The benefit of the procedure is limited to one occurrence in the taxpayer's lifetime.
Third condition — Full cooperation: the taxpayer must cooperate unreservedly with the tax authority to determine the factual elements necessary to fix the back-tax. This involves producing all bank statements, contracts, legal documents and other relevant documents for the last ten years.
Fourth condition — Payment: the taxpayer must pay — or at least make serious arrangements to do so — the evaded taxes, default interest and the penalty reduced to one-fifth of the evaded tax (art. 175 para. 3 let. c FITA).
Procedure: Filing, Processing and Back-Tax
The voluntary disclosure takes the form of a letter addressed simultaneously to the Federal Tax Administration (for direct federal tax) and to the competent cantonal tax authority (for cantonal and communal taxes). It must clearly identify the taxpayer, describe the undeclared items (income, assets, Swiss or foreign bank accounts, shareholdings, securities, real estate) and the relevant tax periods.
The tax authority then opens a back-tax procedure (arts. 151 et seq. FITA) covering the last ten years. It determines the taxes not collected for each relevant period, calculates default interest and sets the reduced penalty. The taxpayer receives a back-tax decision which can be challenged by objection if they consider the retained elements to be incorrect. PBM Avocats assists in verifying the authority's calculations, challenging any errors and negotiating a payment schedule if necessary.
It is essential to gather all documents before filing the disclosure, as incomplete cooperation may jeopardise the non-punishable regime. A thorough retrospective tax due diligence over ten years is generally necessary to identify all items to be regularised.
International Context: AEOI, FATCA and the End of Bank Secrecy
Voluntary disclosure has gained increased importance since the introduction in 2017 of the Automatic Exchange of Information (AEOI / CRS — Common Reporting Standard) between Switzerland and its partners. Under this framework, Swiss and foreign banks automatically transmit to Swiss tax authorities information on accounts held by Swiss tax residents abroad, and vice versa. Similarly, the FATCA agreement requires Swiss financial institutions to transmit to US tax authorities information on US taxpayers' accounts.
In this context of increased international tax transparency, spontaneous regularisation has become a necessity for taxpayers holding or having held undeclared assets abroad. PBM Avocats advises on the implications of AEOI and FATCA, identifies disclosure risks and accompanies you through a complete and secure regularisation procedure.
Frequently Asked Questions about Non-Punishable Voluntary Disclosure
How many times can one benefit from non-punishable voluntary disclosure?
Only once. Art. 175 para. 3 FITA (for individuals) and art. 181a para. 1 FITA (for legal entities) expressly state that non-punishable voluntary disclosure can only benefit each taxpayer once. If the same taxpayer regularises their situation a second time, they can no longer invoke this procedure and will be exposed to fines for tax evasion. The limit is individual for each taxpayer; a jointly filing spouse's situation is independent in this regard.
Does voluntary disclosure also apply to cantonal taxes?
Yes. Cantons are required to adopt equivalent provisions in their own tax law, in accordance with art. 56 para. 1bis FHTA. In Geneva, the Personal Income Tax Act (LIPP) and the Fiscal Procedure Act (LPFisc) provide for analogous rules. In the canton of Vaud, the Direct Cantonal Tax Act (LI-VD) also contains corresponding provisions. In practice, a voluntary disclosure relating to undeclared income or assets is filed simultaneously with the Federal Tax Administration (FTA) for direct federal tax and with the cantonal tax authority for cantonal and communal taxes.
What amounts must the taxpayer pay under voluntary disclosure?
A taxpayer benefiting from non-punishable voluntary disclosure must pay three elements: (1) the evaded taxes, calculated over the last ten years (back-tax under arts. 151 et seq. FITA) for undeclared income and assets; (2) default interest on amounts due, calculated from the date on which the tax should have been paid; (3) a penalty reduced to one-fifth of the evaded tax (art. 175 para. 3 let. c FITA), representing in practice a considerable reduction compared to the ordinary penalty which can reach triple the evaded tax. However, no criminal prosecution for tax evasion is initiated.
Is voluntary disclosure possible if a tax investigation is already underway?
No. One of the fundamental conditions of non-punishable voluntary disclosure is that the initiative is truly spontaneous, meaning no tax authority has yet become aware of the offence. If the FTA or cantonal authority has already made contact with the taxpayer on the items in question — for example by sending a specific information request or opening a targeted audit — the condition of spontaneity is no longer met. It is therefore essential to act before any contact from the tax authority regarding the items to be regularised.
What about heirs who discover undeclared assets in an estate?
Heirs who discover, in the course of an estate, assets or income that the deceased had not declared benefit from a special regime provided for in art. 153a FITA and art. 56 para. 1ter FHTA. In this case, the heir's voluntary disclosure gives rise to no criminal prosecution against them (they are not the perpetrator of the evasion) and, importantly, no back-tax or penalty is claimed for periods before the year of death: the heir is only required to pay default interest. This rule aims to encourage heirs to spontaneously regularise estates involving undeclared assets, notably foreign bank accounts.