The case
This Federal Supreme Court ruling concerns the automatic exchange of information between Switzerland and Argentina.
Two Argentine citizens, A and B, are the beneficiaries of Trust C, which has an underlying company D. During 2018, this company (D), as reporting financial institution (FI), provided the Federal Tax Administration (FTA) with information on the assets of the trust and the identity of the settlors. In 2019, A and B requested the FTA to suspend the transmission of their data until there was a ruling in Switzerland applicable to the transfer of their data to Argentina.
The authorization of the exchange of information was confirmed by the administration and the Federal Administrative Court. The complainants argued that the exchange of data violated their privacy and requested that the transfer of their information to Argentina be suspended. However, the Federal Supreme Court ruled that the exchange of information did not constitute a violation of the public interest and dismissed the complaint.
Source: Judgement of 6 June 2023 (2C_946/2021)
The commentary
The second sentence of Art. 19 para. 2 AEOI has to be interpreted the following way: A person who is subject to automatic exchange of information can apply to the FTA for an order under Art. 25a AEOI, if the automatic exchange of information would constitute a measure contrary to public policy. This also corresponds to the case law on Art. 26 para. 3 lit. c OECD-MA, which also refers to national public policy.
The term “order public” is to be interpreted restrictively. Its application must not impede the proper implementation of the agreement, even though it naturally defies a precise circumscription, it should be noted that a breach of public policy occurs when fundamental legal principles are violated, or the act in question is incompatible with Switzerland’s system of law and values. The result blatantly contradicts the meaning and purpose of its own legal system or would intolerably offend Switzerland’s sense of justice. However, not every deviation from the mandatory provisions of Swiss law constitutes a violation of public policy. Such a restrictive interpretation does not violate Art. 8 EMRK and thus also Art. 13 EMRK, as long as other means are used to prevent the dissemination of data outside the circle of automatic information exchange.
In short: A declarant may, within the framework of the automatic exchange of information procedure under Art. 19 para. 2 sentence 2 AEOI in conjunction with. Art. 25a VwVG. Art. 25a VwVG, can only successfully challenge the exchange of data if the alleged violation also constitutes a violation of Art. 8 EMRK and is mixed with a violation of public policy.
In summary, this means that against the background of the automatic exchange of information, the data subject has only very limited legal options to challenge the exchange of false or incorrectly collected data.
