Baer clients reprieved by Swiss court
Zurich-based JB is one of 13 Swiss banks that are threatened with prosecution by the US authorities for allegedly helping their American clients evade tax. It is not eligible to enter the USDoJ's amnesty programme for banks, because it was already being investigated when the amnesty was launched last August. The USDoJ alleges that more than 400 of JB's clients used sham corporate entities to conceal assets amounting to more than CHF545 million (USD600 million).
In April 2013 the US Internal Revenue Service (IRS) submitted an administrative assistance request to the Swiss government, seeking the identities and bank details of all these clients. The IRS obtained its information in 2011 from two former JB employees, probably Daniela Casadei and Fabio Frazzetto, who were later charged by the US with tax conspiracy offences. The IRS request was initially granted by the Swiss Federal Tax Administration, which is eager to see an end to the crisis in its banking sector.
Before complying with the request, JB was required by Swiss law to notify its clients of the impending disclosure. Some of them exercised their right of appeal against it, and their appeal has now been allowed by the Federal Administrative Court in St. Gallen. The court decided that the IRS request did not provide clear evidence of tax fraud as required by the two countries' double taxation treaty. It merely requested information on all accounts owned through a domiciliary company between 2002 and 2012, without providing the names of the beneficial owners suspected of tax fraud. Thus the request had been granted unlawfully and JB must not comply with it, the court decided.
The US-Switzerland double taxation treaty was in fact renegotiated in 2009 to permit 'group requests' for information on unnamed accountholders described in the request by their behaviour alone, as the JB request did. That amendment came into force on 1 February 2013 but it is not retroactive and does not apply to bank information originating before that date.
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