Swiss gov't: US lawsuit violates independence

4th May 2009, Comments 0 comments

The Swiss Federal Office of Justice accuses US authorities of breaking Swiss banking secrecy law.

ZURICH - Switzerland on Friday accused US authorities of violating its sovereignty and breaking Swiss banking secrecy law by demanding that top Swiss bank UBS provide data on clients suspected of tax fraud.

In response to a lawsuit brought by the United States against the country's biggest bank, the Swiss Federal Office of Justice also said it disregards a US-Swiss tax treaty and could hurt negotiations for revising the treaty.

In an attempt to take action against tax cheats, US tax authorities filed a lawsuit to force UBS to provide information on 52,000 clients.

"This proceeding has a direct bearing on the Swiss-American Double Taxation Convention, as well as on the Swiss legal system and Swiss sovereignty," said the Swiss justice department's statement.

It noted that the case would "violate Swiss sovereignty since the information in question is located in Switzerland."

"Furthermore, such an attempt might force UBS to violate Swiss law. Finally, the Swiss government emphasises that no other state would hand over data on that scale and in that way," it said.

Swiss banking secrecy laws prohibit banks from revealing client information except in criminal cases.

The government also warned that if the US Justice Department were to pursue the case, it could harm negotiations between Bern and Washington to revise the tax treaty to extend the exchange of information to include tax evasion.

"Switzerland is... concerned that the pending civil court proceeding against UBS might prejudice the successful conclusion of these negotiations and jeopardise ratification of the new treaty," said the justice office.

Switzerland said, "For the foregoing reasons, the Government of Switzerland respectfully urges the Court to deny the petition to enforce the summons."

In a separate proposal, UBS also called on the court to reject the case, citing similar issues raised by the Swiss authorities, such as the bilateral tax treaty and Swiss banking laws.

Switzerland and the United States are holding negotiations on the double-tax exemption treaty after Bern recently agreed to relax its traditional bank secrecy rules to provide more information on foreign tax cheats.

AFP / Expatica

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