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Swiss Court Unable To Block Tax Deals

by Ulrika Lomas,, Brussels

17 December 2012

The Swiss Federal Court in Lausanne has recently rejected an attempt to block entry into force of the bilateral withholding tax agreements concluded between Switzerland and Germany, the UK, and Austria.

The Federal Court ruled that it would not take "precautionary measures" against the entry into force of the agreements, as it is not the responsible authority.

On October 30, 2012, Switzerland’s federal chancellery determined that opponents of the bilateral tax accords with Germany, the UK, and Austria had failed to submit the necessary 50,000 signatures to force a referendum.

President of the Action for an Independent and Neutral Switzerland (AUNS) Pirmin Schwander subsequently submitted an appeal to the Swiss Federal Court, challenging the government’s decision with regard to the agreements with Germany and the UK. A private individual also challenged the government’s decision, demanding that the entry into force date of all three treaties be postponed.

AUNS argued that certain local authorities were responsible for the missing signatures, highlighting the fact that their tardiness meant that the authorized signatures arrived too late at the federal chancellery, missing the referendum deadline. The body therefore insisted that these signatures be counted.

The federal chancellery however, maintained that the signatures must be declared invalid as they were submitted after the referendum deadline expired.

The Federal Court emphasized that the Federal Council is responsible for notifying treaty states that the domestic legal requirements for the entry into force of the agreements have been fulfilled. The Federal Court said that it is not responsible for intervening in the competencies of the Federal Council, which "bears the political responsibility for entry into force of the agreements."

Concluding, the Federal Court stressed that in the interim ruling there is still no decision on the government’s referendum decision, pointing out that during the course of other federal court proceedings the federal chancellery and complainants will have an opportunity to comment before the court decides.

The treaties with the UK and with Austria are expected to enter into force as planned on January 1, 2013. The bilateral tax accord negotiated with Germany was recently blocked in a German mediation committee by opposition parties.

TAGS: court | tax | banking | United Kingdom | offshore | agreements | offshore banking | banking secrecy | withholding tax | Austria | Germany | Switzerland

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