UBS Confirms Non-US Tax Information Requests

by Ulrika Lomas, Tax-News.com, Brussels

17 March 2010

Within its annual report for 2009, the Swiss bank, UBS, has disclosed that, following its settlement agreement with the United States Internal Revenue Service (IRS), it has received requests for information from a number of other jurisdictions relating to its provision of cross-border wealth management services.

UBS reiterates in its report that, in August 2009, UBS executed a settlement agreement with the IRS and the US Department of Justice and, at the same time, the US and Switzerland entered into a separate but related agreement. Among other things, these agreements provided that the IRS would submit a request for information regarding the accounts of US clients maintained at UBS in Switzerland, on the basis that such clients appear to have committed tax fraud or the like within the meaning of the existing 1996 Swiss-US double taxation treaty, to the Swiss Federal Tax Administration (SFTA).

However, in January this year, the Swiss courts ruled that the SFTA did not have a proper legal basis to grant the IRS request for information with respect to accounts of US persons who had failed to report substantial amounts of income over an extended period, but had not engaged in fraudulent activity within the meaning of Swiss law.

While the Swiss government decided last month that it will seek to amend the Swiss-US agreement and submit it to Parliament for approval, UBS’s report has had to conclude that “it is not yet clear what effect, if any, the recent Swiss court decision prohibiting the provision of certain UBS client data to the IRS may have on our 2009 settlements with US authorities and our businesses.”

In the meantime, following the disclosure of the US cross-border matter and the settlement with the IRS, the report further states that “tax and regulatory authorities in a number of countries have requested information relating to the cross-border wealth management services provided by UBS and other financial institutions.”

It adds that: “In particular, the revenue services of Canada, the UK and Australia have served requests upon, or made inquiries of, UBS and other Swiss and non-Swiss financial institutions providing cross-border wealth management services for information relating to such services that is located in their respective jurisdictions. UBS is cooperating with these requests strictly within the limits of financial privacy obligations under Swiss and other applicable laws. It is premature to speculate on the outcome of any such inquiries.”

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