The Swiss Federal Tax Administration (SFTA) may provide on a regular basis information to their foreign counterparts on the status of international administrative assistance proceedings in tax matters ("status update practice"). In the particular case, the SFTA provided to the Spanish tax authorities information to the end where it confirmed that a administrative complaint had been filed against a SFTA order of March 2015 to transfer certain documents to the Spanish tax authorities.
"The SFTA, through its status update practise had already disclosed that information to be transmitted was available a final decision was reached".
The Spanish bank client affected filed a complaint against this order with the Swiss Federal Administrative Court ("SFAC") A the additional request of the Spanish bank client, the SFAC issued an interim decision in February 2016 and prohibited Spain from providing further information on the status of proceedings until a final decision had been reached. The SFAC thereby assumed that the SFTA, through its "status update practise" vis-à-vis the Spanish authorities, had already disclosed that information to be transmitted was available before its transfer order became final. There is no legal basis for the status update practise, so the SFAC. The FTA, on the other hand, reached the federal court.
Upon appeal by the SFTA, the Swiss Federal Supreme Court now approved the appeal by the SFTA in a public consultation and affirmed the legality of the status update practise. Contrary to the arguments of the lower court, the mere communication that a complaint is pending does not constitute material information which Switzerland is not entitled to inform the Spanish authorities before a final conclusion of the procedure.
The Swiss Supreme Court further argued, that there was even an obligation to provide information on the status of international judicial assistance procedure assistance which is imposed by Article 25 bis of the Double Taxation Convention between Switzerland and Spain. The provision in question must be interpreted in accordance with the principle of good faith in the light of the relevant Article 26 of the OECD Model Tax Convention and the more precise comment of the Global Forum on Transparency and Exchange of Information in Taxation. Incidentally, the provision of procedural information is one of the internationally recognized standards that have served as criteria for the Global Forum to assess compliance with the rules on mutual assistance, particularly by Switzerland.
"The Swiss Supreme Court argued, that there is an obligation to provide information on the status of international judicial assistance procedure assistance."
Though information on the state of international judicial assistance proceedings of the may support the notion that transferable tax data is actually available. However, this is an indirect consequence of the duty to inform, so the Swiss Supreme Court. Moreover, foreign tax authorities can conclude from the mere duration of the international judicial assistance proceedings that a complaint was lodged, which argument has of course some merits.
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