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Switzerland Hopeful Of Settling US Tax Dispute

by Ulrika Lomas,, Brussels

30 August 2013

The Swiss Federal Council has agreed to plans for resolving the Confederation's tax dispute with the US.

The Council has asked the Federal Finance Department to finalize a joint statement designed to draw a line under past disagreements over the role Swiss banks have played in assisting US clients in evading their US tax obligations.

The decision follows the Swiss National Council's rejection in June of legislation that would have allowed banks to cooperate with the US authorities and pass on a certain amount of information. The Federal Council moved quickly to reassure the US Department of Justice that parliament's vote did not signal a rejection of efforts to find a solution to the problem.

The Council has said that the text of the joint statement will be published as soon as the US signs it. It is hopeful that the agreement should enable Swiss banks to resolve the dispute within the scope of existing legislation.

The Swiss Bankers Association (SBA) welcomed the news, declaring that "the final step towards a solution has been taken and the US can now launch the program." The SBA added that once the program is made public, each bank will analyze its situation and make a decision on how to proceed.

Michael Parets, partner in Withers' Zurich office, which has been advising US taxpayers in Europe on their position, comments: "Following the agreement of the new disclosure deal, US taxpayers will need to act with some urgency if they have any undisclosed accounts that are, or were previously, held in Switzerland. US taxpayers disclosed to US authorities under this new program are very likely to have the IRS-sanctioned compliance procedures - such as the Offshore Voluntary Disclosure Program and the more recent streamlined disclosure procedure - closed off to them, which may result in much higher penalties and even exposure to criminal prosecution."

TAGS: compliance | Finance | tax | tax compliance | tax avoidance | ministry of finance | agreements | legislation | Switzerland | United States | revenue statistics | trade association | trade

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