In a recent judgment the Swiss Federal Supreme Court (2C_653/2018, of 26 July 2019) ruled that Swiss tax authorities may under certain circumstances, even without actual grounds for suspicion, provide foreign tax authorities with information on the identity and assets of clients of Swiss intermediaries presumed to be taxable abroad.
In the case at hand, the French tax authority requested information on the identity and account balances of bank clients based on a list of 40,000 entries by way of administrative assistance. The data had originally been seized by the German tax authority in the course of a criminal investigation at a German UBS branch and then forwarded to the French authorities.
On the basis of said request, the Swiss Tax Administration ordered UBS Bank to disclose the respective information to the French authorities. UBS lodged a successful appeal against this order with the Federal Administrative Court. In its subsequent appeal to the Supreme Court, the Swiss Tax Administration disputed the qualification of the French request as a so called "fishing expedition". Pursuant to established jurisprudence of the Federal Supreme Court, “fishing expeditions” are speculative requests without an obvious connection to ongoing investigations and are not an appropriate basis for a successful request for administrative assistance (BGE 141 II 436). Confirming the position taken by the Swiss Tax Administration, the Supreme Court now took the view that the request for administrative assistance in the case at hand was not to be qualified as a "fishing expedition", because the information provided by the French authorities had been sufficient to substantiate the suspicion of illegal conduct, as (at least) some of the listed individuals were suspected of tax evasion.
Thus, in the case of group requests, the Supreme Court is satisfied with the fact that only part of the relevant group may have violated their tax obligations in order to justify an obligation of the bank to disclose all information on all the individuals concerned. Although the written judgement has not yet been issued, the decision has been heavily criticized by practitioners and in literature. Individuals and entities with a banking relationship in Switzerland and their advisors will closely monitor the legal developments in this regard.