Swiss Parliament Rejects UBS Agreement

by Ulrika Lomas, Tax-News.com, Brussels

09 June 2010

Switzerland’s National Council, the Confederation’s lower house of parliament, has rejected by 104 votes to 76, the critical US-UBS agreement. It also voted to subject the out-of-court settlement to a non-binding referendum in the event of an agreement finally being reached.

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.

Despite a court ruling in January that the Swiss parliament must adopt the agreement, both the Swiss People’s Party (SVP), and the Social Democrats (SP) decided to make their approval conditional. The SVP are determined to ensure that parliament does not agree to a tax on banking bonuses, while the Social Democrats have called for a tax to be imposed on bonuses and income in excess of CHF1m (EUR726,330).

The UBS-US agreement will now be passed back to the Senate for revision. Yet time is very much of the essence as the current session of parliament ends on June 18. Failure to reach a timely agreement would prove severely damaging to bilateral relations.

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