Personal dimension of the principle of specialty upheld

The French tax authorities requested administrative assistance regarding a French national who claims to be resident in Switzerland. They suspect that he actually lives in France and has not declared all his bank accounts opened abroad, in Switzerland in particular. On 3 July 2024, the Federal Tax Administration (FTA) issued decision granting France administrative assistance. A third party whose name appeared on the documents to be communicated, appealed to the Federal Administrative Court (FAC) against this decision. He argued that, given the recent update to the Commentary on Article 26 of the OECD Model Tax Convention (OECD MC), there was a risk that the French authorities might not respect the personal dimension of the principle of specialty. In other words, the French authorities might also use the information received in relation to him. 

Amendment to the OECD MC Commentary
On 19 February 2024, the OECD published a new version of its Commentary on the OECD MC stating that information received by a State through administrative assistance may be used not only in respect of the person against whom the request is made but also in respect of other persons. Since the provisions on the exchange of information between Switzerland and France are aligned with the OECD MC, the question arises about the impact of the recent update to the Commentary on the interpretation of the agreement between Switzerland and France. 

To resolve this issue, the FAC relies on a recent judgment of the Federal Supreme Court¹  specifying that, in principle, the version of the Commentary in force when the agreement was concluded is authoritative. In its reasoning, the FAC points out that the principle of specialty in its personal dimension is part of the fundamental rules of administrative assistance. This principle is not an open term liable to evolve over time. Moreover, the new version of the Commentary does not reflect the practice of the Contracting States after the agreement was signed. Nor can this amendment be deemed a mere clarification. In this context, the new version of the Commentary cannot be relied upon in interpreting the agreement. The FAC thus upholds the personal dimension of the principle of specialty and partially accepts the appeal. The information received may only be used in respect of the person concerned and the FTA must inform the requesting State about the scope of this restriction in its decision.

This judgment may be appealed to the Federal Supreme Court within the restrictions of Article 84a of the Swiss Federal Supreme Court Act of 17 June 2005, that is, if the legal question at stake is of fundamental importance or if the case is particularly significant for other reasons; a decision to be made by the Federal Supreme Court.

¹ Federal Supreme Court decision 149 II 400
² See Federal Supreme Court decisions 147 II 13 and 146 I 172