Swiss Supreme Court Quashes Move To Stall Offshore Bank Info Transfer To India

Geneva: In a monumental verdict, the Swiss Federal Supreme Court, has ruled that even if persons who are ultimate beneficiaries have not received any money from secret offshore trusts and numbered bank accounts, the Swiss authorities can still go ahead with sharing such confidential information with India.

This move has certainly shattered the hopes of many resident Indians who were banking on the top court of Switzerland to halt, or at least delay, the flow of data to the income tax department in India.

As per a report by Economic Times, councils hired by wealthy Indians have presented their arguments before Swiss courts, saying that personal financial information of this sort is irrelevant to the Indian tax office because the latter cannot tax the beneficiaries in the absence of any distribution of funds from foreign trusts.

However, the apex court has laid down in multiple rulings over the past two weeks that it would not sit in judgment on why Indian authorities have asked for information and whether they can claim tax on the back of such data.

As per the Swiss Supreme Court, Switzerland will share information only if India seeks it without judging the data's ultimate relevance and end-use.

The ruling is in regards to the foreign trusts in tax havens with multiple beneficiaries, some of whom are related to large Indian business houses.

Notably, a common structure used by wealthy Indian families to keep funds away from the Income Tax department's radar is through 'discretionary trusts'- where trustees have the discretion to distribute the income, capital gains, or principal amounts from the trust to the beneficiaries.

Typically, such a trust holds shares of a company, incorporated in the same or in a different tax haven, having accounts with a Swiss Bank, while the family members are named as beneficiaries of the trust.

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