Swiss Parliament Approves UBS Agreement

by Ulrika Lomas, Tax-News.com, Brussels

16 June 2010

After much political wrangling, Switzerland’s National Council, the Confederation’s lower house of parliament, has finally approved, during a second round of votes, the highly controversial UBS agreement with the US. Yet despite this momentous decision, the matter has by no means reached a successful conclusion, as the country’s two councils have yet to agree on an optional referendum.

Having rejected the treaty in a first reading, the National Council narrowly voted in favour of the agreement during a second round of votes, by 81 votes to 61, with 53 abstentions. The victory followed a last minute change of heart by the Swiss People’s Party (SVP), which had made its approval conditional on parliament’s rejection of a tax on banking bonuses.

Nevertheless, discussions are by no means over, and approval of the treaty is far from secured. While the National Council has voted in favour of an optional referendum, the Senate, Switzerland’s upper chamber, remains vehemently opposed.

Failure to unite on the issue by Friday 18, the close of the parliamentary session, will result in the need for a conference to take place between members of both councils who will be tasked to prepare a suitable proposal. In addition, a final round of votes will also determine the fate of the agreement. Although, theoretically, the agreement could still be rejected at this stage, such an outcome is not anticipated.

In the event that a referendum is carried out, however, Switzerland would be unable to fulfil its obligations to the US in time. The Federal Council has given its assurances that it will provide assistance to US authorities in accordance with the agreement by August 19. A referendum would require the Federal Council to wait 100 days before it is fully able to apply the treaty.

Concluded in August last year, the agreement provides that UBS is to disclose to US authorities the names and bank details of 4,450 of its American clients, suspected of evading taxes over a number of years with the help of the Swiss banking giant. In return, civil charges against the bank would be dropped.

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