Swiss Lawmakers Approve TIEAs

by Ulrika Lomas, Tax-News.com, Brussels

23 March 2010

Switzerland’s upper house of parliament has approved five tax information exchange agreements (TIEAs), with the US, the UK, Denmark, France and Mexico.

The agreements, yet to be ratified by parliament’s lower house, contain provisions that will compel Switzerland to submit information to third countries' tax authorities upon request, in cases of tax evasion; removing client protection provided under current Swiss banking secrecy laws.

The move will be welcomed by UBS, which requires the amendment to Swiss law to settle its ongoing case with US tax authorities. Should the provision be adopted it will allow the Swiss bank to hand over data on 4,450 clients who allegedly avoided paying US tax. The law change, however, is likely to come under fire in Switzerland’s lower house of parliament. The Right-wing party, SVP, which holds the most seats, but not a majority, is expected to reject it, subjecting the TIEAs to a public referendum.

Currently Swiss tax law allows the exchange of tax information in cases of tax fraud, but not tax evasion. Without the clause in the Swiss TIEA with the US, the deal between the US government and UBS, as mediated by the Swiss government, will fall through, subjecting the Swiss bank to criminal proceedings.

Finance Minister, Hans-Rudolf Merz has encouraged the adoption of TIEAs with France and Germany, despite strained relations over bank account information obtained from a stolen data.

Seeking to nullify fears over the use of such data, Merz told Swiss television show Classe Politique: "We won't give administrative assistance if stolen data is presented. That's our sovereign right.”

"France has stolen data; if we get a request for administrative assistance from France, we're not honouring it,” he concluded.

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