In recent years, the exchange of tax information has been massively reinforced by the further development of existing and the creation of new instruments. The aim of the international community is to prevent tax advantages resulting from deliberate concealment of tax data by the taxpayer. Historically, requests for administrative assistance have been a well-known instrument for this purpose. In recent years, the automatic and spontaneous exchange of information have been created as new Instruments.
The rules regarding administrative assistance have also been adjusted and extended as part of the reorga-nisation of the exchange of information between states. In recent years, the new rules regarding administra-tive assistance in tax matters, combined with the new self-conception of the government authorities with regard to the exchange of tax information, have led to a large number of Federal Supreme Court rulings
which have redefined the application and rules of administrative assistance and adapted them to develop-ments in international tax law. This development is shown below and the existing rules and principles are illustrated.
Administrative assistance shall help the tax authorities to enforce domestic (tax) law with the help of infor-mation obtained from foreign tax authorities. In the case of administrative assistance requests, however, this exchange of information for tax purposes does not take place automatically or spontaneously between states; instead, a state provides information only upon a specific and justified request by the tax authorities
of another state. The legal bases for administrative assistance are the bilateral agreements on avoidance of double taxation (DTAs). In Switzerland, the Tax Administrative Assistance Act (TAAA) and the Tax Admini-strative Assistance Ordinance (StAhiG) regulate the execution of international administrative assistance.
According to the Federal Supreme Court, the following rules play a central role in the handling of a request for administrative assistance in order to ensure that data can be supplied from Switzerland to a foreign state by means of a request for administrative assistance:
Identification of the persons concerned
Since the Federal Supreme Court ruling of 12 September 2016 (BGE 143 II 136), the practice for the iden-tification of the person concerned has been that the requesting state must provide the requested state with sufficient information to enable it to identify the persons concerned without excessive effort. An important point here is that the name of the person need not necessarily be mentioned when making the request. The bank account number is an example of a possible identification of the concerned person without mentioning his or her name.
This practice has been confirmed by the Federal Supreme Court in further rulings: Ruling of 1 September 2017 (BGE 143 II 628), ruling of 9 April 2018 (2C_646/2017), ruling of the Federal Administrative Court of 30 July 2018 (A-1488/2018).
Group request and list request
In principle, the legislation (TAAA) only provides for requests in individual cases and group requests. Accor-ding to jurisdiction, however, it cannot be concluded that requests for administrative assistance which con-cern a number of persons but which are not group requests within the meaning of Art. 3 c TAAA would not be admissible. So-called «list requests» are also admissible. The jurisdiction has thus created an additional typology of requests. The distinction between These different types of requests is not that simple. For exam-ple, in its decision of 30 July 2018 (A-1488/2018), the Federal Administrative Court stated that requests con-cerning several persons known by name who have a close relationship to one another (e.g. spouses or a company and its owners) are generally treated as individual requests. If the identification of the person(s) concerned is not by name but, for example, by credit card or bank number, it is also an individual request.
In the case of group requests, the requesting tax authority does not know the names and addresses of the persons concerned. On the contrary, it refers to an indefinite number of taxable persons who cannot be identified individually, but only on the basis of an identical pattern of conduct (Art. 3 c TAAA; ruling BGE 143 II 628 of 1 September 2017, ruling 2C_695/2017 of 29 October 2018). According to the Federal Supreme Court, the group request must fulfil the following criteria in order to be admissible and not constitute a «fishing expedition» or evidence gathering (Art. 7 lit. a TAAA) (A-1488/2018; BGE 143 II 628; BGE 143 II 136):
- The request must contain a detailed description of the group, describing the specific facts and circumstances which led to the request.
- It must state the applicable tax legislation and the motives for considering that the taxpayers belonging to that group have failed to fulfil their tax obligations.
- It must show that the information requested is suitable for ensuring compliance with the obligations.
The list request is a hybrid: It is an individual search that is made within the framework of a list request and where the identification is carried out differently than by name, e.g. by specifying the account number. Thus, a number of persons are taken into consideration of whom only a few details are known (ruling 2C_695/2017 of 29 October 2018). In BGE 143 II 628, for example, the request contained a list of nine credit card numbers. The Federal Supreme Court stated that this did not constitute a group request with identification by means of patterns of conduct, since the request for administrative assistance concerns a certain number of persons who would be identified by means of a credit card number. However, since the request for administrative assistance, as in the case of group requests, does not state the names or addres-ses of the persons concerned, it is justified, for reasons of coherence, to apply the three above-mentioned criteria for group requests analogously to list requests.
The Federal Supreme Court consolidated this jurisdiction in several rulings: ruling of the Federal Administra-tive Supreme Court of 30 July 2018 (A-1488/2018), ruling of the Federal Supreme Court of 29 October 2018 (2C_695/2017).
Illegally acquired data
The question of whether Switzerland should also comply with a request for administrative assistance if the foreign request is based on stolen data has long been controversial. In BGE 143 II 224 of 17 March 2017, the Federal Supreme Court stated that a state that buys Swiss bank data in order to use it for administrative assistance requests shows behaviour that is not compatible with the principle of good faith. Otherwise, the
question of whether a state has violated the principle of good faith pursuant to Art. 7 lit. c TAAA must be assessed on the basis of the circumstances of the individual case. In the ruling of 17 July 2018(2C_648/2017), the Federal Supreme Court clarified its jurisdiction: the mere use of illegally acquired
data by the requesting state, for example, does not yet constitute conduct contrary to good faith. The con-duct of the requesting state is only contrary to good faith if it gave the requested state the express assu-rance that passively obtained stolen data would not be used for the purpose of administrative assistance and thereafter did not comply with this agreement. In conclusion, it can be said that the foreign tax authori-ties violate Art. 7 lit. c TAAA and the principle of good faith if they have purchased the stolen data and used it for a request for administrative assistance or if they have assured Switzerland that they will not use stolen data for administrative assistance requests and then do so nevertheless.
Furthermore, the Federal Supreme Court stated in the ruling 2C_648/2017 that the good faith of a state is a prerequisite in international relations (see also BGE 143 II 224 and 2C_646/2017). This means that, in principle, there is no reason to doubt the accuracy of the presentation of the facts and declarations of other states. If there are serious doubts, Switzerland can ask the requesting state and, if necessary, demand assurance that the request is not based on information derived from Acts punishable under Swiss law. However, it cannot be regarded as an infringement of good faith by the requesting state if it does not give such an express assurance despite a request from Switzerland, as long as it is not obliged to give such an assurance under the DTA.
Principle of good faith applies only between States
According to the Federal Supreme Court, the principle of good faith applies in connection with a DTA bet-ween the requested and the requesting state (ruling 2C_28/2017 of 16 April 2018). In the context of a re-quest for administrative assistance, natural or legal persons concerned cannot invoke a form of protection of legitimate expectations (good faith) against the requested state if, for example, the requesting state gave an
assurance that no tax proceedings would be instituted against them.
Principle of subsidiarity
In its ruling of 16 April 2018 (2C_28/2017 or BGE 144 II 206), the Federal Supreme Court described the principle of subsidiarity. This principle states that the requesting authority must have exhausted all possibili-ties provided for in its domestic tax procedure and available at that time for obtaining information before it can request administrative assistance from the other state. The circumstances prevailing at the time of
submission of the request for assistance shall apply. For example, in the aforementioned Federal Court ruling with regard to the principle of subsidiarity, it was irrelevant that the taxpayer disclosed his tax infor-mation to the requesting state after it had submitted the request for administrative assistance.
Principle of availability and reciprocity
The principle of availability is partially integrated into the DTAs and provides that only information that can be obtained under the legislation of both contracting states may be obtained and issued. Switzerland is therefore not obliged, as the requested State, to surrender information which cannot be obtained under the legislation or in the normal administrative procedures of the requesting state (principle of reciprocity). The requesting authority must therefore provide confirmation with its request that, if it were within its jurisdiction, it could obtain this information under rightful application of the law or in the ordinary course of its admini-strative practice (Art. 2 para. 1 lit. j aStAhiV). In the event of such confirmation by the requesting authority, Switzerland may only refuse to grant assistance if it has reasons to believe that the declaration made is
clearly incorrect. In its ruling of 9 April 2018 (2C_646/2017), the Federal Supreme Court concluded that the Netherlands had expressly confirmed that it was in a position to obtain the information in comparable cases and to Forward it to Switzerland.
Taking into consideration the principles and rules in force, it is clear that the exchange of information on request will not lose much of its importance with the introduction and expansion of the Automatic Exchange of Information (AEOI). On the contrary, it can be assumed that the information obtained through the AEOI will provide states with new «bases» or clues for requesting administrative assistance from foreign tax authorities. It is therefore important to keep an eye on the jurisdiction and legislation regarding requests for administrative assistance.