Revised UBS Agreement Signed

by Ulrika Lomas, Tax-News.com, Brussels

02 April 2010

The Swiss and US governments have reached an agreement that will allow the Swiss tax authority to hand over details of UBS account holders accused of evading US taxes.

The amending protocol to the original UBS agreement signed by Switzerland and the US last August circumvents a legal ruling by the Swiss Federal Administrative Court in January which said that banking secrecy rules prevented the handover of bank account information under a mutual assistance treaty.

The amending protocol, signed in Washington on March 31, elevates the status of the UBS agreement to the same level as the bilateral double taxation treaty between the US and Switzerland. In certain circumstances, the UBS agreement now takes precedence over the double tax treaty, and according to the Swiss Federal Office of Justice, "permits Switzerland to provide treaty assistance in cases not only of tax fraud, but also of continued and serious tax evasion."

"The amending protocol states clearly that the UBS agreement is not simply a competent authority interpretation, but constitutes an international agreement," the justice office explains. "Furthermore, a conflict of laws regulation determines that the UBS agreement takes precedence over the bilateral double taxation convention and the attendant protocol in the event of any clash."

Under the original UBS agreement, the Swiss Federal Tax Administration (SFTA) would have handed over details of about 4,450 individuals accused of evading US taxes. The amending protocol and the January ruling the the Swiss court, according to the justice office, allows the SFTA to pass on details of about 4,200 suspected of "continued and serious tax evasion" in the US.

The new agreement must, however, be approved by the Swiss parliament before going into effect.

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