Reuters logo
UPDATE 4-Switzerland strikes tax deal with US
June 19, 2009 / 12:31 PM / 8 years ago

UPDATE 4-Switzerland strikes tax deal with US

* Key step towards removal from tax haven list

* Ministry says deal never depended on solving UBS case

* US govt is suing UBS to retrieve client data

* UBS shares rise after the news

(Adds US comment, updates shares)

By Sam Cage and Sven Egenter

ZURICH, June 19 (Reuters) - Switzerland and the United States have reached agreement on a double taxation treaty, the Swiss finance ministry said on Friday, a key step towards removal from a list of tax havens.

Switzerland, whose private banks manage around $2 trillion of foreign wealth, aims to secure 12 new bilateral tax deals by the end of 2009 which could allow it to be removed from an OECD “grey list” of states which need to improve tax cooperation and avoid possible sanctions from G20 nations. [ID:nLF492254]

Talks with Washington are particularly crucial for Berne as U.S. authorities have accused Swiss bank UBS UBSN.VX (UBS.N) of helping rich clients to hide money in secret Swiss accounts. UBS is losing clients because of the bad publicity.

While the Swiss-U.S. agreement had never been dependent on solving the case against UBS, it could prove difficult to force through parliament without a solution, a spokesman for the Swiss Finance Ministry said.

UBS shares reversed losses after the news and were 0.6 percent lower at 14.42 Swiss francs by 1514 GMT, behind a 1.6 percent higher European banking sector .SX7P.

“That has brought hope that a solution for the UBS tax dispute will be found soon,” one trader said.

“It’s good news, in a way, that there are discussions,” said Teresa Nielsen, an analyst at bank Vontobel. “But we would probably have to get more details on what is actually in the double tax agreement.”

UBS declined to comment.

Under pressure from the G20, Switzerland agreed in March to relax its prized bank secrecy and accepted for the first time to share certain bank client data with other jurisdictions once bilateral tax treaties are ratified.

The U.S. deal is in compliance with OECD guidelines, the ministry said.

“The decision will permit an exchange of information on tax matters in individual cases where a specific and justified request has been made,” it said in a statement.

It is the sixth such agreement the Swiss have struck, after Denmark, Norway, France, Mexico and one other unnamed country.

SECRECY

The U.S. Treasury confirmed it reached a deal with the Swiss government to revise a two-way income tax treaty to boost an information exchange aimed at combating tax evasion through offshore accounts.

“This treaty will increase our ability to enforce our tax laws and will help bring an end to an era of offshore accounts and investments being used for tax evasion,” U.S. Treasury Secretary Timothy Geithner said in a statement.

The Treasury’s statement made no mention of the UBS case.

The U.S. government is suing UBS to retrieve thousands of names of American clients who allegedly stashed money in secret accounts in contravention of U.S. tax laws.

UBS is fighting the civil suit and says compliance would require its employees to commit fraud in Switzerland, which jealously defends its bank secrecy legislation.

The bank settled with the U.S. Department of Justice in February to avoid criminal charges by agreeing to pay a $780 million fine and providing a certain number of U.S. account holder names.

UBS has pledged to transfer all its U.S. offshore clients to onshore accounts in the United States, removing another barrier to cutting a deal. (Additional reporting by Albert Schmieder in Zurich and Kim Dixon and David Lawder in Washington, editing by David Jones and Sue Thomas)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below