Swiss Supreme Court Clarifies Illicit 'Fishing Expeditions' In International Tax Assistance Procedures

Author:Dr. Thomas Rihm
Profession:Rihm Attorneys
 
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On July 23, 2015, the Dutch tax authorities filed with the Federal Tax Administration Agency in Switzerland a request for international tax assistance in order to identify prospective Dutch taxpayers through certain group criteria but w/o providing the specific names of those potential taxpayers. The request targeted holders of bank accounts with UBS in Switzerland (this between February 1, 2013, and December 31, 2014), who had a (tax) domicile address in the Netherlands, and who did not comply with a previous UBS-notice to confirm their tax conformity for the Netherlands.

The Swiss Federal Tax Administration Agency approved this group inquiry in a decision of November 25, 2015, which was now upheld by the Swiss Federal Supreme Court on September 12, 2016 (but only published last week). The decision of Switzerland's highest court is a leading case as it sheds light on the various double taxation treaties concluded by Switzerland since 2009 in order to establish conformity with OECD-standards which allow since 2012 so-called group inquiries.

"The Swiss Federal Supreme Court clarified the much disputed topic as to whether Switzerland's International Tax Assistance Act of 2012 prevails over the country's tax treaties concluded since 2009."

The applicable Swiss/Dutch taxation treaty was amended on November 9, 2011, in order to bring it in line with information exchange standards of the OECD Model Convention on Income and Capital Taxation, which basically allows group inquiries since July 17, 2012 (the date when the official OECD-Commentary gave its interpretation to that end), whilst the amended treaty wording still required that the tax authority requesting certain tax relevant information provide the specific names of the potential taxpayers. Furthermore, Switzerland enacted on September 28, 2012, an International Tax Assistance Act, which allows group inquiries, so a dispute arose in first instance as to whether this act should prevail...

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