Exchange of Confidential Tax-Payer Information: No Name? No Problem

 

screenshot_2016-09-20-13-14-52.jpg

The Swiss Supreme Court has provided some guidance on the ambit of a ‘fishing expedition’ under OECD provisions related to exchange of information; and set out in Article 26 of the OECD Model Tax Agreement.

Since 2012, when the OECD Model was amended to reflect the current formulation of Article 26 on Exchange of Information, the inclusion of this version has become one of the primary  indicators of a jurisdiction’s compliance with international norms on transparency and exchange of information for tax purposes.

Article 26 (1) states:

The competent authorities of the Contracting States shall exchange such information as is foreseeably 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.

Foreseeably Relevant & Fishing Expeditions

The ‘foreseeably relevant ‘ standard is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that Contracting States are not at liberty to engage in “fishing expeditions” or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer

 

Moreover…

It is expected that a request for information should be sufficiently detailed so at to rebut an assertion that the request is in the nature of a ‘fishing expedition’.

The Case

In an effort to crack down on tax avoidance by Dutch tax-payers , in 2015, the  Netherlands sought to use the Exchange of Information provisions in its Tax Treaty with Switzerland, which includes the OECD  model Article 26. Relying on this provision the Dutch requested information on Dutch account holders at UBS and Credit Suisse.

The request did not identify the names of the Dutch-taxpayers/account holders.

In March this year, the Swiss Federal Administrative Court sided with a Dutch client of UBS fighting the order, ruling the request was not covered by the information-sharing agreement since it did not include names of individuals.

The tax agency appealed, and on September 12 this year, Switzerland’s Federal Supreme Court ruled the Dutch request did not require the names of clients but just needed enough information to identify account holders.

The court said the purpose of the double taxation agreement is to ensure a broad information exchange between the Netherlands and Switzerland, without encouraging so-called “fishing expeditions”.

Not a Shot in the Dark

In a break with what was Swiss settled law about what constitutes a ‘fishing expedition’, the Federal Supreme Court determined that the absence of names in a request for information by Switzerland’s tax treaty partner did not offend the letter or spirit of the treaty provisions.

Read more here

 

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s