A major tax agreement between the USA and Switzerland, which would have paved the way for UBS to disclose customers' account details to American tax authorities, has been rejected by the Swiss lower house of parliament.
Andreas Kolb, partner in the Switzerland office of international law firm Eversheds, explained the UBS case was separate from Switzerland’s general exchange of information policy.
Switzerland’s co-operation in that case was ‘unique’ and ‘due to the fact that UBS violated US law’.
An agreement had been made by the Swiss Government with the US to prevent further sanctions against UBS, but the agreement was not in line with the existing Swiss-US double taxation treaty, as the Swiss Federal Administrative Court confirmed.
Neither was it in line with the new Swiss OECD-standard treaties, which forbid retroactivity and fishing expeditions.
According to Mr Kolb, the situation created a paradox: ‘Under the new double tax treaty with the US signed in September 2009, exchange of information would not be granted in the UBS case.
'This is due to the fact that the US are not in the position to indicate the names of the taxpayers. If the agreement of August 2009 should not be approved, it would seem to be unfair to blame UBS for that and to continue the proceedings in the US.’
He added that, regardless, ‘the whole incident has already persuaded more than 15,000 people to make voluntary disclosure – thus giving the Internal Revenue Service to a substantial degree what it wanted’.
‘Swiss bank secrecy has not been changed by the UBS case. Generally, only information which concerns years following the entry into force of the amended double tax treaties will be exchanged,’ Mr Kolb stressed, although he noted that ‘under some treaties, such as [with] US, France, Germany, the exchange of information will be applied earlier.’
