2C_653/2018: Admi­ni­stra­ti­ve assi­stance to Fran­ce to estab­lish the iden­ti­ty of UBS clients

In a high-pro­fi­le ruling on July 26, 2019, the Federal Supre­me Court (2C_653/2018) ruled that the dis­clo­sure by Switz­er­land to Fran­ce of the iden­ti­ty of UBS cli­ents pre­su­med to be liable for tax in Fran­ce wit­hin the scope of admi­ni­stra­ti­ve assi­stance pro­ce­e­dings was lawful.

In May 2016, the French Direc­tion Géné­ra­le des Finan­ces Publi­qus (DGFP) a requ­est for admi­ni­stra­ti­ve assi­stance to the Swiss Federal Tax Admi­ni­stra­ti­on (FTA). On the basis of lists con­tai­ning around 40,000 account and other bank num­bers, it reque­sted the iden­ti­ty and account balan­ces of the cor­re­spon­ding bank custo­mers of the UBS. The account and bank num­bers ori­gi­na­ted from per­sons pre­su­med to be liable for tax in Fran­ce. The lists were sei­zed from Ger­man bran­ches in 2012 and 2013 as part of a cri­mi­nal inve­sti­ga­ti­on in Ger­ma­ny and later for­war­ded to France.

After the FTA had gran­ted the requ­est for admi­ni­stra­ti­ve assi­stance in 2018, the UBS The com­pa­ny filed an appeal against this deci­si­on with the Federal Admi­ni­stra­ti­ve Court (FAC). The appeal of the UBS was appro­ved by the Federal Admi­ni­stra­ti­ve Court in its ruling of July 30, 2018. The appeal of this judgment by the FTA has now led to the supre­me court cla­ri­fy­ing the que­sti­on of whe­ther France’s “list requ­est” should be granted.

The Federal Supre­me Court has publicly deli­be­ra­ted the case. The writ­ten rea­sons for the ruling are still pen­ding. The ver­dict was clo­se, with three votes in favor and two against. In par­ti­cu­lar, the que­sti­on of whe­ther the requ­est for admi­ni­stra­ti­ve assi­stance con­sti­tuted an inad­mis­si­ble fishing expe­di­ti­on was dis­puted. Accord­ing to cur­rent prac­ti­ce, “fishing expe­di­ti­ons” are pure­ly spe­cu­la­ti­ve inqui­ries that have no appa­rent con­nec­tion with ongo­ing inqui­ries or inve­sti­ga­ti­ons. A “fishing expe­di­ti­on” is, in the words of the Federal Supre­me Court in an ear­lier ruling, a requ­est for “infor­ma­ti­on at ran­dom” (BGE 141 II 436 S. 445 E. 4.4.3 m.w.H.; cf. FTA, Admi­ni­stra­ti­ve and Legal Assi­stance in Tax Mat­ters, Decem­ber 2017, p. 8). The majo­ri­ty of the federal jud­ges denied the exi­stence of a “fishing expe­di­ti­on” in the spe­ci­fic case. In their view, the infor­ma­ti­on pro­vi­ded by Fran­ce was suf­fi­ci­ent to con­clu­de that the­re was a sus­pi­ci­on of ille­gal con­duct. The sus­pi­ci­on of ille­gal con­duct rela­ted to the fact that “some of the per­sons con­cer­ned were tax­able per­sons in Fran­ce who had not ful­fil­led their fis­cal obli­ga­ti­ons” (cf. Media release of the Federal Supre­me Court). The Federal Supre­me Court thus con­clu­des that, in the case of list or group requests, it is suf­fi­ci­ent if only the fol­lo­wing con­di­ti­ons are met one part of the group – and not the group as a who­le – has not ful­fil­led its tax obli­ga­ti­ons. It is hoped that the writ­ten rea­sons for the judgment will pro­vi­de fur­ther infor­ma­ti­on on the pre­cise rea­so­ning and the necessa­ry pro­of that the­re is a sus­pi­ci­on that part of the group are tax eva­ders in France.

Fur­ther­mo­re, the majo­ri­ty of the federal jud­ges came to the con­clu­si­on that the princip­le of spe­cia­li­ty (accord­ing to which a use of the data con­tra­ry to its inten­ded pur­po­se is inad­mis­si­ble) does not justi­fy a refu­sal eit­her. The federal jud­ges agreed that the princip­le of spe­cia­li­ty must be obser­ved. The UBS had fea­red in this con­nec­tion that the infor­ma­ti­on could be used against it in the ongo­ing cri­mi­nal pro­ce­e­dings, which are being con­duc­ted in Fran­ce on alle­ga­ti­ons of money laun­de­ring against the UBS is used. In order to pre­vent such use and thus a vio­la­ti­on of the princip­le of spe­cia­li­ty, the Federal Supre­me Court requi­red expli­cit assuran­ces from the French aut­ho­ri­ties. The majo­ri­ty of the federal jud­ges con­si­der the gua­ran­tees given by the French aut­ho­ri­ties to the federal admi­ni­stra­ti­on in this regard to be sufficient.

The majo­ri­ty of initi­al reac­tions to the ruling have been cri­ti­cal. In fact, it is dif­fi­cult to deter­mi­ne whe­re the bor­der­line to an inad­mis­si­ble “fishing expe­di­ti­on” should still run, if the sus­pi­ci­on of fis­cal mis­con­duct with regard to a part of a group is suf­fi­ci­ent for a list requ­est. Howe­ver, a final clas­si­fi­ca­ti­on and assess­ment will only be pos­si­ble after publi­ca­ti­on of the writ­ten rea­sons for the ruling. The­re are also serious doubts as to whe­ther Fran­ce will actual­ly adhe­re to the princip­le of spe­cia­li­ty or whe­ther the data will not ulti­mate­ly be used for other pur­po­ses (or at least in fact to form opi­ni­ons in French cri­mi­nal pro­ce­e­dings against the UBS will contribute).