The Italian client and Swiss secrecy before 2001

Article 47 and the distinction between evasion and fraud

At the end of the twentieth century the legal position of an Italian resident with an undeclared account in Lugano rested on two pillars of Swiss law. The first was Article 47 of the Federal Act on Banks and Savings Banks of 8 November 1934, which made it a criminal offence for a bank's officers and employees to disclose information entrusted to them in that capacity. Chapter D.I describes the origins of the provision in the banking crisis of the 1930s and its later reputation abroad. The second pillar was the distinction, characteristic of Swiss tax law, between tax evasion (Steuerhinterziehung, sottrazione d'imposta), which consists in the mere non-declaration of income or assets and was treated as an administrative offence, and tax fraud (Steuerbetrug, frode fiscale), which requires the use of forged or false documents to deceive the tax authorities and was treated as a crime.¹ Swiss judicial assistance in criminal matters and Swiss administrative assistance under double taxation treaties were available, if at all, only for tax fraud. A foreign authority that suspected its resident of having omitted a Swiss account from his tax return therefore had no means of obtaining information about it from Switzerland, unless it could show that false documents had been used.

The bank secret was a right of the client, who could waive it, and at the same time an obligation of the bank, which could not release itself from it on its own initiative. A Swiss court or prosecutor could lift it in Swiss proceedings. From 1981 onwards the Federal Act on International Mutual Assistance in Criminal Matters (IMAC) allowed foreign authorities to obtain bank records for the investigation of crimes, including tax fraud, but excluded mere evasion and currency offences from assistance.² For the Italian client the effect was practical immunity, provided he did not carry documents across the border and did not tell his Italian accountant. The weak point of the system lay in Italy, at the border crossing, in the client's home and in his family. Chapter D.II shows how the Italian authorities attacked the cash couriers of the 1960s and 1970s precisely because they could not reach the accounts themselves.

Italian law: from currency control to fiscal monitoring

On the Italian side the legal framework changed when the Republic liberalized capital movements as part of European monetary integration. Until 1990 the export of capital without authorization was a currency offence, while the Ufficio Italiano dei Cambi controlled the foreign accounts of residents. Decree-Law No. 167 of 28 June 1990, converted by Law No. 227 of 4 August 1990, replaced the exchange controls with a system of fiscal monitoring (monitoraggio fiscale). Under this system banks report cross-border transfers above a threshold to the tax authorities and individuals declare their foreign investments and financial assets in their annual income tax return.³ This declaration, filed today in section RW of the Italian income tax return (the quadro RW), became the centre of all later regularization programmes. An Italian resident who held money in Lugano and did not mention it in the quadro RW committed an administrative violation of the monitoring obligations, quite apart from any evasion of the income tax on the interest and dividends earned on it.

The liberalization of 1990 removed the criminal law on capital exports, which had threatened imprisonment for the export of currency without authorization. The new monitoring regime was administrative, with penalties proportionate to the undeclared amounts. For the clients of Lugano banks the relevant risk thereby shifted from the criminal law of the border to the ordinary law of tax assessment, with its limitation periods and its presumptions. The Italian Criminal Tax Law, in its version of Legislative Decree No. 74 of 10 March 2000, then defined the tax crimes of fraudulent declaration, inaccurate declaration and omitted declaration with thresholds that a substantial undeclared Swiss portfolio could easily exceed.⁴ Undeclared income from Swiss assets could therefore constitute a crime in Italy, while the same conduct remained a mere administrative tax evasion in Switzerland and fell outside the scope of Swiss assistance.

Notes

1. Federal Act on Direct Federal Taxation of 14 December 1990 (DBG), SR 642.11, Art. 175 ("Vollendete Steuerhinterziehung", punished by a fine normally equal to the tax evaded) and Art. 186 ("Steuerbetrug": use of "gefälschte, verfälschte oder inhaltlich unwahre Urkunden" to deceive, punished by a custodial sentence of up to three years or a monetary penalty); Federal Act on the Harmonization of Direct Taxes of the Cantons and Communes of 14 December 1990 (StHG), SR 642.14, Arts. 56 ("Steuerhinterziehung") and 59 ("Steuerbetrug"); current texts in droit-bilingue.ch, https://www.droit-bilingue.ch/de-fr/6/64/642.11-175-196.html, https://www.droit-bilingue.ch/de-fr/6/64/642.11-186-208.html and https://www.droit-bilingue.ch/de-fr/6/64/642.14-index.html. ↩
2. Federal Act on International Mutual Assistance in Criminal Matters of 20 March 1981 (IMAC), SR 351.1, Art. 3 para. 3, text in droit-bilingue.ch, https://www.droit-bilingue.ch/de-fr/3/35/351.1-3-7.html. A request is refused where the proceedings concern an act "die auf eine Verkürzung fiskalischer Abgaben gerichtet erscheint oder Vorschriften über währungs-, handels- oder wirtschaftspolitische Massnahmen verletzt". The exceptions are requests under Part Three of the Act where the proceedings concern tax fraud (Abgabebetrug), and, in the current version, requests under all parts of the Act concerning qualified tax fraud within the meaning of Art. 14 para. 4 VStrR. ↩
3. Decree-Law No. 167 of 28 June 1990, converted with amendments by Law No. 227 of 4 August 1990, "Rilevazione a fini fiscali di taluni trasferimenti da e per l'estero di denaro, titoli e valori", Art. 4 (declaration of foreign investments and financial assets). The quadro RW is the section of the modello Redditi in which the declaration is made. ↩
4. Legislative Decree No. 74 of 10 March 2000, "Nuova disciplina dei reati in materia di imposte sui redditi e sul valore aggiunto, a norma dell'articolo 9 della legge 25 giugno 1999, n. 205", Gazzetta Ufficiale No. 76 of 31 March 2000, https://www.gazzettaufficiale.it/gazzetta/serie_generale/caricaDettaglio? dataPubblicazioneGazzetta=2000-03-31&numeroGazzetta=76, Arts. 2, 3 (fraudulent declaration), 4 (inaccurate declaration) and 5 (omitted declaration). The thresholds have been amended several times, most recently by Art. 39 para. 1 of Decree-Law No. 124 of 26 October 2019, as noted in Brocardi.it, https://www.brocardi.it/legge-sui-reati-tributari/titolo-ii/capo-i/ art4.html. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.