Undisclosed foreign bank accounts in Spain (“The Falciani List”)

Undisclosed foreign bank accounts in Spain (“The Falciani List”)

Mr. Falciani, a former employee of the Swiss branch of the HSBC, stole thousends of files of clients of the bank. These data were handed to the Tax Authorities of several countries, Spain being one of them. In this article we discuss the consequences of the discovery by the Spanish Tax Authorities of undisclosed foreign bank accounts of a few hundred Spanish residents, thanks to the evidence provided by the data stolen to the HSBC by Mr Falciani.

In his first decision about this controversial issue, the Spanish Supreme Court has accepted as valid evidence the bank data stolen by Mr. Herve Falciani to the HSBC in Switzerland, in a criminal case for tax fraud. The Supreme Court confirms a 6 years prison sentence for tax fraud to one tax payer who had hidden more than 5 million euros in Swiss bank accounts. His name and accounts appeared, along with more than 500 Spanish taxpayers, in the documents stolen by the former employee of the HSBC in Switzerland, Hervé Falciani. The Spanish Tax Office got the Falciani List from the French authorities.

The Spanish Law, likewise most legal systems in the world, contains a rule to prevent the use before the Courts of any evidence obtained directly or indirectly in violation of the Constitutional Rights and Freedoms of the citizens. This rule is commonly known as the fruits of the poisoned tree.

In his judgement, the Spanish Supreme Court distinguishes between two forms of illegally obtaining documents or data from third parties. Thus, if the police or any other authority obtains such information in violation of the Constitutional Rights, the proof is invalid; but if a private individual, unconnected with the State institutions, steal the data to obtain a profit, without the primary intention to prefabricate a legal proof in a trial, the evidence could be valid.

The ruling, which was written by the Supreme Court’s President, Manuel Marchena, understands that the prohibition contained in the Law, responds to the idea, in its historical origin and in its jurisprudential systematization, of being an” element of prevention against the excesses of the State in the investigation of crimes “, since” the power of the State in the prosecution of illegal acts cannot use shortcuts “.

However, another thing is the information obtained illegally by an individual without any connection with the State agents or authorities at the time of data robbery. He explains that the bank files obtained by Falciani were not affected by the prohibition of the Law because “it was information contained in files unlawfully obtained by an individual who, at that time, did not act as an agent of any Spanish authority interested in the punishment of tax evaders. Furthermore, the Spanish Tax Authorities did not obtain said data through any kind of negotiation with Mr. Falciani. Therefore, “the dissuasive purpose underlying the exclusion of the unlawful evidence did not reach Herve Falciani, who only saw in that information a lucrative source for future negotiations. In short, the files were not evidence obtained with the objective, direct or indirect, to make them valid in a process.

Certainly, the Supreme Court decision has caused deep concern in the hundreds of tax payers accused on the grounds of the Falciani List. These tax payers can be grouped in two packs. One group decided to negotiate with the Public Prosecutors and reached agreements to pay the evaded taxes in exchange for light convictions which allowed them to avoid prison. However, other group, convinced that under the “fruit of the poisoned tree” rule could not be convicted, rejected to pledge guilty and decided to face the trial. They are not sleeping well these days.

Tax Partners is a professional firm providing tax litigation services in Spain. Please do not hesitate to contact us.

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