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).