International administrative assistance in tax matters – please do not undermine legal protection!  

Switzerland attaches a great deal of importance to legal certainty, including protecting the rights of individuals in legal proceedings. The federal authorities issued an extremely brief message on 19 March 2024 explaining that, when exchanging information with foreign authorities, they will no longer protect persons not mentioned in the initial request for information. Is this legal? 

 Switzerland has been exchanging information with other countries’ tax authorities when requested for years. It adopted the standard laid down by the Organisation for Economic Co-operation and Development (OECD) in Article 26 of its Model Tax Convention, which governs the exchange of information on request, back in 2009. So far, so good. Unfortunately, the Swiss authorities now appear to have quietly extended the scope of this standard in a way that undermines legal protection for third parties not mentioned in the initial request for information. What is the issue here? 

Principle of speciality 

A somewhat insubstantial message issued by the State Secretariat for International Finance (SIF) on 19 March 2024 stated that the OECD had expanded its commentary on Article 261. This update explicitly permits states to share and use data on persons not mentioned in the initial request for information, i.e. probably persons whom the investigation does not concern. Switzerland has previously ensured legal protection for such third parties – e.g. the bank employee named on a statement or the dentist whose bill was paid from the account in question – and not shared their information unless it was expressly requested. This safeguarded the privacy of thousands of people who were not relevant to the specific investigation. In legal jargon, it is called the “principle of speciality”. The practice was most recently confirmed by a Federal Supreme Court decision in 2020. 

Change of practice with no legal basis? 

In its message of 19 March 2024, the SIF explained that this practice had been “clarified” and that it would implement the OECD’s new interpretation with immediate effect. In other words, the authorities would immediately cease to apply the principle of speciality in relation to persons concerned because the OECD had changed its commentary.  

It is worth pointing out here that the commentary does not constitute a binding or directly applicable legal basis. The legal basis in Switzerland is provided by our double taxation agreements (DTAs), which govern administrative assistance, and the Federal Act on International Administrative Assistance in Tax Matters. These predate the OECD’s latest commentary and forbid the sharing of information on third parties whom an investigation does not concern. The OECD’s Paris office cannot change valid Swiss law through its interpretations. If Switzerland wishes to give up the principle of speciality in relation to persons concerned, which we would of course advise against, then it must first renegotiate its DTAs and amend the aforementioned Act. The Federal Supreme Court upheld this view in a decision last year, explicitly rejecting a dynamic application of the OECD commentary.   


The Swiss authorities will have to explain in detail the extent to which their “clarification” of this practice is actually legal. A parliamentary interpellation on this subject is already pending2. Switzerland should not abandon its principles of legal protection for no reason, it should defend them. 




Urs Kapalle
Head of Tax Strategy
+41 58 330 63 00

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