Swiss Supreme Court approves France's demand for disclosure of UBS client account

The decision overturns a 2016 Swiss Federal Court ruling ordering the Swiss Federal Tax Agency (SFTA) not to comply with the French request.

The case began in 2010, when a former marketing agent for UBS' operation in France collected a list of 600 of the bank's customers, and sent it to the French tax authorities. It took the latter three years to narrow this list down to clients who had had accounts at UBS in Switzerland that they had apparently not disclosed for French tax purposes.

The French authorities asked SFTA to provide full details of these clients' banks accounts. SFTA agreed, but one of the clients – a French national living in Switzerland – objected. He appealed against the disclosure, citing the 'fruit of the poisoned tree' doctrine: that administrative requests based on improperly gathered evidence are invalid.

The Swiss Federal Administrative Court accepted the appellant's arguments, ruling that the request infringed the principles of good faith implicit in the double taxation treaty between Switzerland and France.

However, the SFTA then appealed to the Swiss Supreme Court, which has now ruled that the Swiss prohibition on the use of stolen data did not apply in this case. The court stated that the Franco-Swiss double taxation treaty should be interpreted strictly, and that there was no basis for refusing the international request for assistance.

In holding thus, says Thomas Rihm of law firm Rihm Attorneys, the Supreme Court had to disregard the Swiss Administrative Tax Assistance Act of 2013, which specifically states that stolen data must not be used in international tax assistance procedures. The court's view was that, if the 'fruit of the poisonous tree' doctrine applied to data thefts committed abroad, it would have an extraterritorial effect, which would violate the Swiss legislators' intention in drafting the 2013 Act.

Sources

• Rihm Attorneys (via Mondaq)
• Swissinfo
• STEP news story (13 June 2016): Swiss cantons accept compromise on stolen bank account data
• STEP news story (14 May 2015): OECD approval uncertain over tax transparency request procedures