Facts
On 13 May 2016, the Dutch tax authority requested mutual assistance from the Swiss Federal Tax Administration (SFTA) pursuant to the Double Taxation Agreement between Switzerland and the Netherlands (DTA CH-NL). The subject of the request was the verification of the tax liability of [C.] in the Netherlands in connection with the trademark [I.] and its exploitation by the Swiss companies [A. GmbH] and [B. AG] (appellants). The requesting authority sought, inter alia, annual invoices, profit tax declarations, information on managing directors, shareholders and beneficial owners, account statements as well as contracts and legal proceedings relating to the trademark [I.] . On 5 September 2017, the SFTA issued final rulings against the appellants and announced that it would transmit the requested information to the Dutch authority. The appellants filed an appeal against these rulings with the Federal Administrative Court, which dismissed the appeals with a judgment of 29 June 2018. On 16 July 2018, the appellants filed an appeal in public law matters seeking the annulment of the lower court’s judgment and the refusal of mutual assistance, in particular relying on legal professional privilege and trade secret. The Federal Supreme Court admitted the appeal and dismissed it.
Considerations
1. Admissibility of the appeal The Federal Supreme Court found the appeal admissible under Art. 84a FSCA, as a legal question of fundamental importance was at issue. This concerned the conditions under which legal professional privilege could exclude the provision of mutual assistance. The Federal Supreme Court had not yet ruled on this question, and the practice of the lower courts was inconsistent. The appellants argued that some of the requested information was protected by legal professional privilege and that Art. 26 para. 3 DTA CH-NL and Art. 8 para. 6 TAAA precluded mutual assistance. The Federal Supreme Court held that this question could be of precedent-setting importance for practice and therefore had fundamental significance.
2. Temporal scope of mutual assistance The appellants contended that part of the requested information related to the period before 1 March 2010, for which the DTA CH-NL, pursuant to Art. 29 para. 2, did not provide for retroactive effect. The Federal Supreme Court held that the temporal scope of mutual assistance under Art. 29 para. 2 DTA CH-NL was opened if the information related to a period from 1 March 2010 onwards. This was the case if the information had tax-relevant effects for that period. For example, a document concerning the transfer of trademark rights from 2005 fell within the temporal scope if it still had tax implications after 1 March 2010. This was the case here, as appellant 1 had been involved in legal proceedings concerning the trademark until 2014.
3. Likely relevance of the information The appellants disputed that the requested information was likely to be relevant for the Dutch tax purpose. The Federal Supreme Court held that likely relevance already existed if there was a reasonable possibility that the information could be relevant for the tax purpose. This was the case here, as the requesting authority had provided plausible indications of a special relationship between [C.] and appellant 1. The information was suitable to prove or disprove such a relationship. Moreover, the information was also relevant for the assessment of appellant 1 itself, as it could affect its taxable income.
4. Exclusion grounds under Art. 26…