Switzerland: Project On Banking And Foreign Tax Authorities

By Author: Paolo Bernasconi
Total Articles: 62
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A few days ago, in the midst of the storm on the relationship between UBS and the U.S. Treasury, the Federal Council has published draft rules of procedure on the international exchange of tax information. We asked for a brief description of the content and consequences, in the context of current discussions with the U.S. Treasury and the Treasury EU startup. Paolo Bernasconi, who last March had already launched a similar project at a conference of the Center for Banking Studies.
I'm only sixteen items, but they fill a gap that in recent years has become ever more profound: the rules of procedure to run applications from foreign tax authorities directed the Federal Tax Administration (FTA), designated as already in practice as the sole competent authority in this matter. Finally specifies the rights of all people involved in the Swiss proceedings to enforce a demand from the foreign tax authority, ie banks and other financial intermediaries who are in possession of information and documents requested by foreign tax authorities, taxpayers as well as foreigners who are interested in the collection and the possible transmission ...
... of this information to the tax authorities of your own home. Need well-known fact, and in 1981 that Switzerland has adopted a law and an ordinance to regulate the powers, procedure and procedural rights concerning the cooperation between Switzerland and other countries in the interest of open abroad for prosecution of violations of criminal nature. The challenge is to equip the AFC with similar instruments relating to applications submitted in the interest of the application of double taxation conventions or procedures for fiscal offenses committed against the foreign tax authorities.
Prohibited abuses
Finally is encoded explicitly the prohibition of abuse by foreign tax authorities. First, foreign requests are rejected to the extent that they are based on information or documents which have been obtained in violation of Swiss criminal law. For example, should be rejected a request for cooperation made by the French tax authorities asked that information and documents relating to French taxpayers based on what has derived from the French tax authorities from information and documents made available from that HSBC Bank official who is accused of having stolen illegally, violating the bank secrecy and committing espionage (Article 273 of the Swiss Penal Code). The rule is welcome, but unfortunately restrictive in the sense that the prohibition concerns only those elements that had been obtained in violation of Swiss criminal law. This means that this rule - bolt would not work if, for example, the German tax authorities asked information to the Swiss relying on documents obtained illegally by quell'ormai famous official of LGT Trust Vaduz. So here's an initial proposal for improvements: remove the word "criminal law", the adjective "Swiss", which is too limiting.
The second prohibition covers the so-called fishing expedition: indeed, in the draft is expected that a foreign application is admissible only if it contains, inter alia, the certain identification of the taxpayer subject to the procedure in the interest of which the application is made and identifying some of the broker owner of information. This way you will ensure, once and for all, any uncertainty arising from the use of ambiguous terms within the double taxation conventions, such as those with France. But they also block the extensive interpretations by the courts, such as by the Federal Administrative Court in its judgments on 5 March 2009 in which he declared unacceptable the demand of the U.S. tax authorities relating to clients of UBS, although it did not contain the name of any customer but only some indication of which could belong to the taxpayers requested.
Do the laws, not war
The Federal Administrative Court has been clear: the ruling on January 5 last year, recalled that all lawyers know, namely that a rule of law, for example, that the requirement of maintaining banking secrecy, can bear the exception only insofar as the same is required by a standard at the same level, both formal and material, ie a rule which has been approved by Parliament and has thus the value of a formal and material law. In that ruling, as FINMA did not have a legal basis, the TAF has declared illegal the delivery of 285 names of UBS clients in the U.S. Treasury, in violation of banking secrecy and committing economic espionage in violation of Article. 273 CPS. The award of the TAF of the 21 U.S., has repeated the same, of course, a principle: extending the tax subtraction of the possibility of transmission of information or documents to the U.S. Treasury provided in an annex to the now infamous intergovernmental agreement of 19 August 2009 is nothing since the agreement was not approved by the Federal Assembly. In fact, it is not permitted to waive bank secrecy if not through a provision of the same level, ie a rule that has been approved by Federal Parliament. But now we fell back, the Federal Council: proposed rules governing the exchange of information under the Convention against double taxation through its order rather than by a law, while recognizing that this is a temporary situation with a view to tag this project a federal law. After the lists of the 2009 law, it is advisable to avoid a solution that would be rejected by TAF. Parliament is able to approve, with urgency, a federal law that sets forth the rules of the project put out for consultation last Wednesday. But let's change the title: in fact, assistance in tax matters is not just that provided by the Convention against double taxation but also that of a hypothetical (given the recent experiences of Liechtenstein in other countries) specifically on the exchange of information in tax matters (TIAE), not to forget the exchange of information in tax matters already provided by three bilateral treaties of 2004 with the European Union, for which the channel is provided for both criminal and taxation systems. The channel should be governed their tax by the same rules just proposed by the Federal Council.
UBS, instead of IRS Pay Bonuses!
Those managers of UBS who invented and implemented thousands of customers for U.S. taxpayers mechanisms to defraud the U.S. Treasury (IRS) have facilitated the conviction of UBS to pay 780 million dollars to the U.S. Treasury, a reputational loss of historic importance, that is reflected on the entire Swiss financial institutions inflict clashes ever seen so far in our country: the judiciary that disavows, in less than three weeks, both FINMA that the Federal Council. It is not over: the European Union, Tremonti on his head, stands at the window waiting to share the spoils of this war between UBS and the IRS, where Switzerland has allied with UBS. The fuse to the gun cotton is rapidly approaching the powder: the U.S. government might consider it unsatisfactory outcome promised by the Federal Council and by UBS in the agreements concluded respectively with the U.S. government and IRS August 19, 2009, and thus could spread the deadly torpedo consists of the legal proceedings against UBS U.S.. Faced with already caused many disasters and imminent, now it's at UBS: instead of paying 4 billion in bonuses to its executives, may allocate this money to pay the debts of the American taxpayer to the U.S. Treasury (IRS), which UBS has already confessed be due, at least if not to their initiatives to their partnership. Perhaps, some Swiss, customers, contractors, employees, politicians and officials are tired of paying the damage caused by certain managers of UBS, for the work of which must meet UBS and nobody else.
Paolo Bernasconi, lawyer