According to its notification of 27 October 2015 the Swiss Federal Tax Administration (ESTV) approved a group enquiry of the Dutch tax administration (Belastingdienst, Central Liaison Office Almelo, the Netherlands). The individually substantiated conclusive decrees can be viewed directly at the ESTV (Eigerstr. 65, 3003 Berne, Switzerland). These conclusive decrees contain further explanations regarding the admissibility of the group enquiry and can only be viewed by the persons concerned.
What are group enquiries?
Group enquiries concern requests for mutual assistance, with which information is requested concerning several persons, who can be identified based on precise details. These do not have to refer to a specific individual case – as customary so far according to the administrative assistance clause. A group must rather be sufficiently definable owing to specific details. The individuals concerned themselves however do not have to be identified. These do not even have to be known to the requesting authority.
On 17 July 2012 the Fiscal Committee of the OECD decided that the so-called information clause in Art. 26 of the OECD Model Convention also covers group enquiries. Consequently, since this time group enquiries are principally permitted between states, which have concluded Double Taxation Agreements with a (large) information clause according to the OECD Model Convention.
Group enquiry of the Dutch tax administration: Which account holders of the X-Bank were requested to prove proper taxation and did not provide this proof however?
The Netherlands made the following group enquiry on 23 July 2015.
The group must have fulfilled all of the following criteria from 1 February 2013 to 31 December 2014:
- Account holder of an account/several accounts at the X-Bank
- According to the bank-internal documentation an account holder had a domicile address in the Netherlands
- X-Bank sent the account holder a letter, with which he was oriented about the upcoming termination of the business relationship, should the account holder not have signed and returned the form “EU interest taxation – authorization for the voluntary disclosure” within the deadline or prove its tax-conformity to the bank in any other manner
- The account holder did not provide sufficient proof of the tax-conformity to the X-Bank, which is sufficient for the bank, despite the despatch of the afore-mentioned letter
Excluded from the transmission are accounts:
- which at no time during the requested period featured an amount of EUR 1,500.00 or more
- for which the account holder has provided one item of the following proof:
- Proof the executed disclosure of the account owing to the Treaty of 26 October 2004 between the Swiss Federation and the European Community, which corresponds with a disclosure according to the Interest Information Regulation
- Proof that the account holder took part in the Dutch programme for the voluntary disclosure
- Proof of the fiscal declaration of the account in the Netherlands
- which were already sent to the Netherland within the framework of a request for mutual assistance
Retrospective effect of group enquiries in Switzerland
Art. 1 Par. 1 of the Swiss regulation concerning the international administrative assistance in tax matters (Tax Administrative Assistance Regulation, StAhiV) envisages that group enquiries are principally permitted for information about facts, which relate to the period of time from 1 February 2013.
Austria thus failed with a group enquiry of 16 December 2014 to Switzerland, with which all “parties who have sneaked out” should be identified, who between the signing of a compensation agreement between Austria and Switzerland on 13 April 2012 until the entry into force of this agreement on 1 January 2013, removed their financial funds from Switzerland. The period of time was before the relevant key date of 1 February 2013.
As opposed to this the Swiss Federal Court declared a group enquiry of the United States of America to be admissible in its decision of 5 July 2013 (file no.: 2C_269/2013), which also related to periods of time before the afore-mentioned key date. Accordingly a request for mutual assistance supported on Art. 26 DTA-USA 96 is to be entered into if the presentation of the facts is given with sufficient detail in order to produce a suspicion of fraudulent offences, etc. and to enable the identification of the wanted persons. The request for mutual assistance was accordingly covered by Art. 26 DTA-USA 96 irrespective of whether the persons were named. Consequently, deviating provisions of the agreement that is applicable in an individual case will have precedence over the Tax Administrative Assistance Regulation (Art. 1 Par. 2 Tax Administrative Assistance Regulation).
Ban on the so-called “Fishing Expeditions”
Nevertheless it remains to be observed that unfounded investigations, so-called “Fishing Expeditions”, are not permitted without sufficiently determined indications (e.g.: “all customers of a bank in the state X, who have their place of residence in the state Y”).
Specific features must always be connected with tax evasion.
Of course in an individual case a delimitation between an inadmissible investigation for proof and an admissible group enquiry cannot always be carried out in a clear cut manner.
Therefore, an examination and, if applicable, also the filing of a legal remedy can be all the more important.
Legal remedy by affected taxpayers
There are various possibilities to react to an admissible group enquiry.
The persons affected by the group enquiry are – without being named – are publicly requested by the ESTV to give their Swiss address (with a place of residence in Switzerland) or a person in Switzerland who is authorized to accept service (with a place of residence overseas) so that the conclusive decree can be properly served to said person.
There is further the possibility to approve the sending of the information to the requesting authority within the framework of the so-called simplified proceedings.
If no approval is declared then the ESTV will issue a conclusive decree. If this cannot be served in the absence of a transmitted address then this will be notified without naming the persons concerned by a notification in the Federal Gazette (Art. 14a Par. 6 Sentence 1 Tax Administrative Assistance Act).
The legal remedy of an appeal can be lodged against the conclusive decree at the Federal Administrative Court with a period of notice of 30 days. The deadline will begin to apply on the day after the notification in the Federal Gazette (Art. 14a Par. 6 Sentence 2 Tax Administrative Assistance Act)
In view of the introduction of the automatic tax information exchange it remains to be seen which implications this development will have for Germany. In any case a sample is now available for a group enquired approved by the ESTV. It is to be assumed that further states will now send group enquiries to Switzerland according to the Dutch sample. Group enquiries represent an efficient possibility until the introduction of the automatic tax information exchange about financial accounts (AIA) and implementation of the Common Reporting Standard (CRS) to obtain tax-relevant data in a simple and at the same time very numerous form. Therefore, an immediate need for action is required for customers who are not yet honest with regard to tax. The risk of the discovery of an offence is increasing consistently. Our lawyers and tax advisors will of course be pleased to be of assistance to you and your customers for advice in an individual case. Disclaimer: The information contained in this Newsletter concerns non-binding information. The Newsletter should draw attention to current topics in selected fields of law, e.g. of commercial and tax law and provide initial orientation. This cannot replace legal and tax advice. The Newsletter is prepared with the greatest possible care and attention. Nevertheless, no liability can be assumed for the contents. We will of course be pleased to be available to you for further questions and for concrete advice in an individual case.