OASIS
ORGANIZATION OF ADVOCATES SPECIALISING IN INTERNATIONAL SERVICES
SWITZERLAND 2010/2011
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ORGANIZATION OF ADVOCATES SPECIALISING IN INTERNATIONAL SERVICES SWITZERLAND 2010/2011
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SWISS DEVELOPMENTS 2010/2011Otto Guth, DUNAND GUTH MARDAM BEY
Since the last OASIS meeting, the following major developments occured in the Swiss legal system : 1. Different modifications in tax matters 2. Introduction of a Swiss Federal, Civil and Criminal Procedure Code 3. The acceptance in a popular votation of the initiative concerning the deportation of criminal foreigners 4. Modification of the unemployment insurance law
1. Different modifications in tax matters a) Administrative assistance in case of tax evasion During the last 2 years, our report discussed the modification of the legal framework in Switzerland concerning the administrative assistance in tax matters in favour of foreign tax authorities. It should be recalled that Swiss legislation makes the difference between tax fraud and tax evasion. As tax fraud is considered the use of forged documents in a tax declaration. Tax fraud is a criminal offence and at the request of foreign country, judicial assistance could be granted and the banking secrecy protecting the assets of the suspected person in a Swiss bank could be lifted already in the past. In case of tax evasion, i.e. in case of the unlawful non disclosure of assets or income in a tax declaration, which is considered as an administrative infringement, in the past, no assistance could be granted at the request of a foreign State and the banking secrecy protecting the assets of the suspected person could not be lifted. In the 2009 report, we explained that on March 13th, 2009, and under pressure of the G-20 meeting, the Swiss Federal Government declared that it will negotiate double taxation treaties with all countries providing for administrative assistance in tax matters in accordance with the OCDE model clause allowing the lifting of the banking secrecy also in case of tax evasion but only in individual cases without permitting fishing expeditions. In the 2010 report, we explained that a large number of double taxation treaties providing for administrative assistance in case of tax evasion were concluded with different countries. In those different treaties, while they all admit the principle of administrative assistance in case of tax evasion, the conditions which must be met in order to grant administrative assistance are worded in different ways. As a general principle, it can be considered that no fishing expeditions are accepted and that the request of the foreign authorities should mention the name of the foreign taxpayer, the name of the bank where the account is open and contain a substantiation why the foreign taxpayer is suspected of tax evasion. When these treaties were submitted to the Parliament for approval, the Swiss Government assured, that the conditions to grant administrative assistance in tax matters are very strict and that in substance the Swiss practice will not really change. However, this year, the Swiss Government seems to back away from its former staunch position. The member of the Swiss Government in charge of the Justice department declared that the different conditions mentioned in the double taxation treaties and approved by the Parliament concerning the granting of administrative assistance in tax matters such as name of the bank where the account is opened and the substantiation why the foreign taxpayer is suspected of tax evasion are technicalities and in fact the name of the taxpayer (or even a mere IBAN) in a request for administrative assistance might be considered as sufficient for the Swiss authorities to make investigations in Swiss banks on behalf of the foreign authorities concerning the accounts of the foreign taxpayer.
b) The Swiss-US administrative assistance in tax matters As you might recall, last year it was reported that the US authorities filed a criminal complaint from the US against UBS requesting that UBS delivers the bank data of 50,000 American clients. The case was settled by a memorandum of understanding between the Swiss and the American Governments in which the Swiss Government undertook to deliver banking information concerning American clients who could have committed tax evasion during an extended period for an important sum, to be precise, the Swiss Government undertook to transmit information concerning bank accounts the beneficial owners of which were American clients in case the bank account existed during more than three years and generated a yearly income of more than US$ 100,000.00 on average or contained assets of more than US$ 1,000,000.00 on average. Last year, we reported that when the Swiss authorities began to execute the memorandum of understanding, certain account holders appealed against the transmission of their files to the Federal Administrative Court which admitted that on the basis of the existing double taxation treaty between the US and Switzerland, only in case of tax fraud “and the like” administrative assistance can be granted. This condition is not met in case of “continued and serious tax evasion” as mentioned in the memorandum of understanding. The Swiss Government can only sign a memorandum of understanding within the framework of the double taxation treaty approved by the Parliament, but it is not entitled to go behond it and change the content of the treaty approved by the Parliament on its own. The Swiss Federal Court explained that if the Swiss Government would like to modify the content of the previous treaty, it has to submit the modification to the Parliament and to get its approval. In fact, this is what happened and as we made our report last year, the approval of the treaty was under discussion. Finally, in June last year, the memorandum of understanding was approved by the Parliament and the Swiss authorities were delivering the bank files of US citizens to the US authorities provided the conditions of the memorandum of understanding are met, i.e. the existence of the bank account during more than three years, assets of more than US$ 1,000,000.00 on average or alternatively a yearly average income of more than US$ 100,000.00. This means that notwithstanding the fact that when the accounts were opened and the assets deposited or the income generated, on the basis of the double taxation treaty existing at that time, no administrative assistance could be granted, on the basis of the approval of the memorandum of understanding of last year, administrative assistance can nevertheless be granted, which is hardly compatible with a foreseeable legal framework on which citizens could rely.
2. Introduction of a Swiss Federal, Civil and Criminal Procedure Code Until now, in Switzerland, every canton and semi-canton had its own civil procedure law and criminal procedure law which meant that Switzerland had twenty-six civil and criminal procedure codes.
Furthermore, the previous twenty-six civil procedure laws continue to apply to cases which were pending before January 21st, 2011. In criminal procedures, the twenty-six previous criminal procedure laws continue to apply to cases where a first instance judgment was rendered already before January 1st, 2011.
3. The acceptance in a popular votation of the initiative concerning the deportation of criminal foreigners Under the Swiss Constitution, if an amendment of the Constitution is demanded by a request signed by more than 100,000 citizens, the amendment of the Constitution must be submitted to a popular votation, in which case the amendment might be adopted or rejected. The request to amend the Constitution signed by more than 100,000 citizens is called “initiative”. In November 2010, such an initiative was submitted to the Swiss population requesting the deportation of foreign citizens to their home countries if they are condemned by a judgment in force for criminal offences committed with violence for burglary, drug dealing or embezzlement of the social security system. All parties with the exception of one were against the initiative pretending that such an amendment of the Constitution would be contrary to the right of foreigners arising out from the treaties with the European Union. Notwithstanding the opposition of all parties to the amendment with the exception of one, the initiative was adopted in November 2010 by a majority of cantons and by a majority of ballots which shows a sincere dissatisfaction of the Swiss population with the situation created by the treaties signed with the European Union and entered into force in 2002, which generated, by way of the free circulation of persons and the abolishing of controls at the frontier, a substantial increase in criminality, especially of burglaries .
4. Modification of the unemployment insurance law Switzerland had in former years a quite generous unemployment law which provided that in case of unemployment, the employee would be granted, up to a yearly salary of EUR. 90,000.00, 70 % of its former salary in case the employee has no children and 80 % of his former salary in case the employee has one or several children. The employee was entitled to this indemnification initially during a period of two years. Some years ago, the two years indemnification period was restricted to certain age categories.
The duration of indemnification of two years requires now a previous employment period of two years. The percentage of indemnification is reduced to 70 % regardless the family charges of the employee. The modification of the law was opposed by the Trade Unions, but to no avail. |
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Organization of Advocates Specialising in International Services
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