Facts
The Federal Supreme Court decided in a dispute between the Federal Tax Administration (FTA) and several appellants regarding the scope of the restriction on the use of information transmitted in the context of a request for mutual assistance.
The U.S. Department of the Treasury (IRS) had requested mutual assistance from the FTA under the Double Taxation Agreement between Switzerland and the USA (DTA CH-US). The FTA then wanted to transmit information to the IRS about a customer who was subject to tax in the USA. Some third parties, whose names were included in the documents to be transmitted, demanded that their identification details be made unrecognizable.
The Federal Administrative Court had partially upheld the appeal and ordered that the names and identification details of two appellants be redacted before transmission to the IRS. It had also obliged the FTA to inform the IRS that the information may only be used in proceedings against the customer who is subject to tax in the USA.
The FTA appealed against this judgment to the Federal Supreme Court.
Considerations
The Federal Supreme Court confirmed that the principle of specialty under Art. 26 para. 1 DTA CH-US has not only a material, but also a personal dimension. Accordingly, the requesting state may not use the transmitted information against persons who were not affected by the request for mutual assistance.
The Federal Supreme Court justified this by stating that the purpose of the principle of specialty - the protection of the sovereignty of the requested state and the correct allocation of responsibility for infringements of fundamental rights - can only be achieved if the principle of specialty is also recognized as having a…