French government is warned that tax investigators cannot use stolen bank documents

Thursday, 05 December 2013
France's Constitutional Council has overruled a new law intended to allow the tax authorities to launch prosecutions based on evidence obtained through illegal channels, such as stolen bank account information.

The measure was part of a Bill approved by the National Assembly in early November. It included 58 separate provisions, mostly aimed at residents who have concealed assets abroad like France's former Budget Minister Jerome Cahuzac.

One of these provisions granted the tax authorities powers to use any information they receive regardless of origin, including illegally obtained documents. Its purpose is probably to neutralise a decision of France's Supreme Court, which in early 2012 ruled that information on 15,000 HSBC Private Bank clients stolen from the bank's Geneva branch could not be used in tax evasion prosecutions.

But now the Constitutional Council, whose role is to check that new laws are compatible with France's Constitution, has stated that this measure is unlawful, at least in part. The tax authorities, it said, cannot rely on documents obtained under conditions subsequently discovered to be illegal ‒ as happened in the HSBC Geneva case.

The constitutional judges also struck out a provision in the new law that would have allowed tax evasion suspects to be detained for four days without charge; and another that imposed penalties on companies in proportion to their revenues.

Also ruled unconstitutional was a new power allowing the government to blacklist as 'tax havens' any country that had not signed an automatic tax information exchange agreement with France by January 2016. The broad scope and tight schedule of this law made it unreasonable, said the judges, especially as the measure would have serious consequences for French taxpayers dealing with blacklisted jurisdictions.


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