Article 26 of the OECD Model Tax Convention on Income and Capital

Article 26 of the OECD Model Tax Convention provides the most widely accepted legal basis for bilateral exchange of information for tax purposes. More than 2,000 bilateral treaties are based on the Model Convention.

Article 26 creates on obligation to exchange information that is forseeably relevant to the correct application of a tax convention as well as for purposes of the administration and enforcement of domestic tax laws.

Article 26 consists of five paragraphs. Paragraph 1 clarifies that the Article applies to taxes of every kind and description including both direct and indirect taxes and sets out the main rule concerning the exchange of information. It also clarifies that Article 26 may be used to obtain information about non-residents and that information exchange is not restricted to taxes covered by the convention.  Paragraph 2 contains rules that ensure the confidentiality of information exchanged. It limits the persons to whom such information can be disclosed and specifies the purposes for which such persons may use the information.

Paragraph 3 contains certain exceptions to the obligation to provide information. Paragraphs 4 and 5 provide that, notwithstanding the exceptions in paragraph 3, a domestic tax interest requirement or domestic bank secrecy rules do not limit the obligation to exchange information. 
The current version of Article 26 was approved by the OECD's Committee on Fiscal Affairs on June 1, 2004. The current version of Article 26 differs from the earlier version in several respects (see changes between current and previous version).  

Text of Article 26:

OECD MODEL TAX CONVENTION ON INCOME AND CAPITAL

Article 26

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information as is forseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
   a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
   b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
   c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.