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Bern, Switzerland (GenevaLunch) – The Swiss Federal Council Wednesday 1 September adopted an ordinance, soon to be replaced by a law, on the procedures to be followed when another country asks for assistance in cases of suspected fiscal fraud. A key element in the text is that the Swiss government will not accept a demand for “administrative assistance” under double taxation treaties if the request is made based on stolen data. The federal tax service will make a preliminary review of the request, which must show “good faith”, the new ordinance dictates. It goes into effect 1 October 2010, but is not retroactive.

A second key element is that the requesting government must provide adequate information to allow Switzerland to identify the account holder and the party holding information about the account, in order to avoid what are called fishing expeditions. Tension rose in 2009 between France and Switzerland over what the Swiss labelled at the time a fishing expedition. France later dropped its request.

Germany and France have both received stolen data from Swiss banks, a cause of some political tension. The UBS case, where a special treaty was drawn up between the US and Switzerland to review data on 4,450 cases of suspected tax fraud, was not based on stolen data per se, but rather on information supplied by a former employee of the bank, to US authorities.