Swiss Court Decision Fortifies International Account Secrecy

The international account disclosure movement took a hit today in a Swiss court decision (A. vs. Eidgenoessiche Steuerverwaltung (ESTV), A-7789/2009. Federal Administrative Court). The Bloomberg.com story on the case recounts the linchpin of the decision: That non-completion of U.S. tax forms and failing to declare income do not constitute "tax fraud" compelling disclosure under international tax treaties. Twenty-five tax cases involving disclosure are tied to the rationale of this decision.

There is other case law pushback, as well, further illustrating that Switzerland's agreement last summer to reveal information about 4,450 UBS accounts is attenuated. That said, it is worth recalling that many believe that the 4,450 account agreement was itself a disappointment. At the heart of the issue is how "tax fraud and the like" should be evaluated in the context of the U.S.-Swiss double taxation treaty. Account secrecy got a booster shot from today's Swiss court decision.