International administrative assistance in tax matters (TF, 2C_219/2022)
In 2018, the tax authority of the Russian Federation submitted a request for international administrative assistance in tax matters to the Swiss Federal Tax Administration (FTA). The request sought information about a Russian company that had paid dividends through three Swiss bank accounts held by Cypriot companies. The FTA granted the request in 2019, a decision upheld by the Federal Administrative Court, and subsequently appealed to the Federal Supreme Court (FSC).
Meanwhile, the geopolitical context significantly deteriorated: following the invasion of Ukraine, Russia ceased to be a party to the European Convention on Human Rights and was suspended from the UN Human Rights Council. In response, the Swiss Federal Council decided in September 2022 to temporarily suspend all administrative assistance to Russia. However, this suspension did not automatically require the FSC to deny assistance requests submitted prior to that decision.
The double taxation agreement between Switzerland and Russia allows for the exchange of information likely to be relevant to its implementation. This exchange is subject to the principle of speciality and a public policy exception: the transmitted data must be used solely for tax purposes, and cooperation may be refused if it would intolerably offend Swiss public order.
The FSC found that, under current circumstances, the transmission of tax information to Russia is problematic: fundamental guarantees of human rights protection are no longer ensured. There is a tangible risk of misuse of the transmitted data, in violation of the principle of speciality. Therefore, rejecting the assistance request is necessary to preserve Swiss public order.
The Court rejected the idea of a prolonged suspension of the proceedings. An indefinite postponement would violate the constitutional principles of promptness (Art. 29 para. 1 of the Federal Constitution) and procedural diligence (Art. 4 para. 2 of the Federal Act on International Administrative Assistance in Tax Matters, LAAF). Given the lack of a foreseeable resolution to the Russia–Ukraine conflict, the request must be denied—while still allowing for the possibility of a future request, as the decision does not carry res judicata effect.
This decision diverges from recent precedents in the field of mutual legal assistance in criminal matters, where the FSC opted for suspension rather than outright rejection. The distinction lies in the nature of the measures: while the release of frozen assets may have irreversible effects, the non-transmission of tax information does not deprive the requesting state of the opportunity to submit a new request later on.
Written by Maxime Guffon