International

Top Swiss court allows French tax authorities access to UBS accounts

In a landmark decision for the Swiss banking sector, Switzerland’s highest court on Friday ruled in favour of a request from the French tax authorities to gain access to the personal records of around 40,000 accounts held with Swiss bank UBS by French residents, and which are estimated to total assets of up to 11 billion euros.

Martine Orange

26 July 2019 à 19h18

This article is freely available.

France’s tax authorities have been granted access to the data records of around 40,000 French clients of Swiss bank UBS in a ruling announced on Friday by Switzerland’s Federal Supreme Court that is regarded as a landmark decision for the country's secretive banking sector.

The deliberation follows a long-running legal bid by the French tax authorities, fiercely opposed by the Swiss banking giant, for access to the details of the accounts. It was triggered in 2013 after France received lists of accounts from the German authorities who had seized the data as part of their own investigations into tax evasion. The French tax inspectors discovered a total of 45,161 accounts were held at UBS in Switzerland by French residents, all of them opened between 2006 and 2008.

In May 2016, France requested the cooperation of the Swiss tax authorities, the Federal Tax Administration, with its investigations to establish whether the holders of around 40,000 of the accounts – both French residents and former French residents – had paid due taxes on the assets held with UBS, which the French tax administration estimated may altogether total up to 11 billion euros. The information requested included the names and dates of birth of account holders and the balance of each account.

In early 2018, the Swiss tax authorities agreed to the cooperation request from France after receiving reassurances that the information sought by the French would be used only for tax issues. However, UBS and a number of account holders challenged the decision before the Federal Administrative Court, arguing that the French request did not sufficiently justify the suspicions that UBS account holders had evaded tax in France.

At the time, UBS and its French subsidiary were about to stand trial in France accused of laundering the proceeds of tax evasion over the period 2004-2012, and active illegal soliciting of French clients to secretly place their wealth in secret accounts with the bank. The bank apparently feared that the initial cooperation agreed with the French authorities could be used against it in criminal proceedings.

In July 2018, the Federal Administrative Court found in favour of UBS. France, it said, had not provided sufficient evidence that “the taxpayers involved have failed to comply with their tax obligations”.

“Simply having an account in Switzerland is not sufficient,” the court concluded. “The explanations delivered by the French authorities were insufficient.”

The Swiss Federal Tax Administration appealed that decision before the Lausanne-based Federal Supreme Court, the highest court in Switzerland, whose ruling announced today, in a narrow verdict approved by three judges to two, has now overturned that of the administrative court.

However, while France can now access the data of the 40,000 accounts, the judges also ruled that the information it receives cannot be used against UBS itself, which is still fighting the criminal case against it in France. This, said the panel of five judges, whose deliberation was an oral one, must be clearly detailed in the subsequent written ruling.

Following its trial in Paris last autumn on “aggravated laundering of the proceeds of tax fraud” and “illegal soliciting” of clients, UBS was found guilty as charged and in February was handed a fine of 3.7 billlion euros and ordered to pay 800 million euros in damages and interest to the French state. UBS has appealed the verdict, and the case is ongoing.

“Regardless of the decision, it is important to note that the Swiss Federal Tax Authority will have to ensure that any data cannot be used against UBS in its pending criminal proceeding in France," said UBS in a statement issued after Supreme Court ruling.

Meawnhile, Switzerland's Federal Department of Finance (FDF) issued a statement on Friday saying it would "carry out a detailed analysis once the written grounds for the judgment are available". FDF head Ueli Maurer, who is also President of the Swiss Confederation, cautiously commented: "The decision concerns administrative assistance in this specific case which dates back many years. Each future request will also be subject to a detailed examination as to whether the conditions for the transmission of data have been fully met."