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(Jun 23, 2010) On June 15, 2010, the National Council, Switzerland's lower house of parliament, reversed its initial, June 8 rejection of the deal and approved an agreement with the United States to settle tax evasion lawsuits lodged by U.S. authorities against the Swiss banking giant UBS AG. The vote was 81-61, made possible after 53 members of the largest parliamentary group, the Swiss People's Party, abstained. Under the agreement (originally arranged in August 2009), UBS is to supply the details of 4,450 secret bank accounts held by U.S. clients suspected of evading U.S. taxes. Because the version approved by the National Council is slightly different from the earlier measure of approval, the Council of States (upper house), which had already endorsed the agreement, had to vote on it again. It approved the agreement on June 17, 2010. (Swiss Parliament Approves Deal on U.S. Tax Cheats, ASSOCIATED PRESS (June 15, 2010); Daniel Pruzin, Switzerland: In Reversal, Swiss Lower House Approves UBS Agreement With U.S., DAILY REPORT FOR EXECUTIVES 114 DER I-1 (June 16, 2010), http://news.bna.com/drln/display/no_alpha.adp?mode=si&frag_id=173018
92&item=country%3ach&cat=country
.)

A Swiss parliamentary panel recommended against holding a referendum on the UBS – United States tax agreement, thereby paving the way for the upper chamber's approval of the deal. (Swiss Parliament Approves UBS-U.S. Tax Deal , REUTERS (June 17, 2010), http://www.reuters.com/article/idUSTRE65D1LJ20100617; Paul Verschuur, Swiss Parliamentary Panel Recommends No Referendum on UBS Case, BLOOMBERG BUSINESSWEEK (June 17, 2010), http://www.businessweek.com/news/2010-06-18/swiss-parliamentary-panel-re
commends-no-referendum-on-ubs-case.html
.) According to Christa Markwalder, chair of the National Council's foreign affairs committee, a parliamentary recommendation in favor of a referendum would have made it impossible for the accounts' data to be handed over by Switzerland to the United States by their agreed-upon deadline of August 24. (Pruzin, supra.)

Under the terms of the agreement, if the deadline is not met, the United States may impose "proportionate rebalancing measures." Those measures include "the possible reopening of the 'John Doe' proceedings initiated by the U.S. Internal Revenue Service and the Justice Department against UBS." (Id.) The aim of the John Doe summons is compel UBS, under threat of fines or, in a worst case scenario, loss of its operating license, to hand over details about the targeted accounts. (Id.)

The Swiss Federal Tax Administration (SFTA) stated that the parliamentary approval of the agreement "means that nothing now stands in the way of UBS client details being disclosed" where the targeted accounts meet the handover criteria. (Daniel Pruzin, Swiss Parliament Gives Final Approval to UBS Deal with U.S., Without Referendum, DAILY REPORT FOR EXECUTIVES 116 DER I-1(June 18, 2010), http://news.bna.com/drln/display/no_alpha.adp?mode=si&frag_id=173081
83&item=country%3ach&cat=country
.)

Provisional application of the agreement is already underway, with the SFTA conducting a review of the targeted accounts to determine whether they meet the criteria. "Under the procedures, the SFTA reviews the accounts and issues a decision, after which those affected have 30 days to appeal to the Swiss Federal Administrative Court, which then issues a definitive ruling." (Id.) Thus far, the SFTA has completed the review process for about 1,800 cases, as a result of which the details of about 500 UBS client accounts have been disclosed by the SFTA or by UBS to the United States with the concerned clients' consent. Another 400 final decisions that have not yet taken legal effect have already been sent, and an additional 650 are reportedly ready to go. Moreover, as a result of the recent parliamentary approval of the agreement, according to the SFTA, "details of approximately 1200 cases can be disclosed to the U.S. (the remaining decisions that have been issued have not yet taken legal effect)." (Id.) Thus, the SFTA has processed about 3,000 cases to date, and almost all of the remaining roughly 1,450 "are already being processed, so efforts to comply with the treaty assistance request are on course," the agency noted. (Id.) (For background information, see also Edith Palmer, Switzerland: Court Decision Denies Release of UBS Bank Records to the IRS, GLOBAL LEGAL MONITOR (Jan. 29, 2010), http://www.loc.gov/lawweb/servlet/lloc_news?disp3_l205401805_text; Secret bancaire: l'affaire UBS, Federal Assembly (Swiss Parliament) website (June 15, 2010).)<

Author: Wendy Zeldin More by this author
Topic: Banks and financial institutions More on this topic
Jurisdiction: Switzerland More about this jurisdiction

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Last updated: 06/23/2010