Switzerland: Dutch “group request” for unnamed bank customers rejected

Switzerland: Dutch “group request” rejected

The Swiss Federal Administrative Court allowed a Dutch taxpayer’s “appeal” in a matter concerning a request from the Dutch tax authorities for information about customers of a Swiss bank. The Swiss court rejected the administrative assistance request in this matter because the Dutch tax authorities did not name the customers of the Swiss bank in the request, and under treaty provisions, the persons must be named.

Related content

Summary

The Netherlands in July 2015 submitted a request for administrative assistance to the Swiss federal tax administration concerning unnamed customers of a Swiss bank—a “group request.” The group request related to Dutch taxpayers who failed to participate in a voluntary disclosure program offer by the Dutch tax authorities. 

The Swiss tax administration subsequently in 2015 approved the group request. In response, a Dutch taxpayer (who was a customer of the Swiss bank) filed an appeal with the Swiss Federal Administrative Court. 

In the meantime, in February 2016, the Dutch tax authorities submitted a substantially similar group request for customers of a second Swiss bank. 

The Swiss court issued a ruling on 21 March 2016, approving the Dutch taxpayer’s “appeal” because under the Protocol to the Switzerland-Netherlands income tax treaty, it is explicitly stated that a taxable person must be mentioned by name in order for the requesting country to receive administrative assistance. In this group request situation, therefore, no administrative assistance could be provided because the names of the taxable persons concerned were not listed.

KPMG observation

The Swiss Federal Administrative Court may be expected to reject other group requests initiated by countries with which Switzerland holds an income tax treaty agreement or a tax information exchange agreement. However, it is unknown whether the Swiss Federal Administrative Court would reach the same conclusion if the income tax treaty agreement or tax information exchange agreement had been signed after July 2012 when the OECD determined that such group requests are to be allowed.

However, it appears that group request would be acceptable under the OECD Administrative Assistance Convention that is now to enter into force on 1 January 2017 in Switzerland. According to a provision of the OECD convention, the name of the taxpayer is only required to be mentioned “where appropriate.” 

Also, the OECD convention, after its entry into force, provides for retroactive application, going back three years for intentional tax offenses subject to prosecution under the criminal laws of the applicant country. If these conditions are satisfied, it appears that the tax authorities in the Netherlands could re-submit its group request—but because of the limited retroactive effect, for tax periods extending back only to 1 January 2014. 

In addition, it appears that the other 90 or so countries that signed the OECD convention apparently could file group requests for customer information from Swiss financial institutions.

 

Read a March 2016 blog article prepared by the KPMG member firm in Switzerland: Swiss Federal Administrative Court rejects group request from the Netherlands

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.