UBS Account Holders and French Tax Authorities

 

On July 26, 2019, the Swiss Federal Supreme Court rendered a groundbreaking judgment in the field of administrative assistance in tax matters. Reversing a 2018 ruling of the Swiss Federal Administrative Court, the Supreme Court decided that information regarding tens of thousands of UBS account holders presumed to have tax residence in France could be transmitted to the French tax authorities.

The decision was rendered by a panel of five judges, who held public deliberations—a rare occurrence at the Supreme Court that only takes place when the panel’s opinions are divided—before approving the exchange of information by a narrow vote of 3-2.

The Supreme Court has decided that the French authorities’ request is not an inadmissible fishing expedition, but rather a permissible “list request,” despite the fact that the French tax authorities did not have any concrete suspicion of tax evasion or other tax infractions for most of the 40,000 account and other numbers concerned by the request.

Swiss Court Ruling

The supreme court said it had received assurances from France that they would not use the evidence in a separate case, where a French court has fined UBS €3.7 billion ($4.1 billion) for encouraging its clients to commit tax fraud. UBS is appealing the decision.

UBS itself also stressed that the information transferred "cannot be used against UBS in its pending criminal proceedings in France. This was also the clear expectation of the court today."

Developments ensuing from the court ruling are likely to be monitored by several governments around the world that have been thwarted in the search for lost tax revenues by Switzerland's strict rules on banking secrecy.