The Swiss parliament has finally voted in favor of a deal that would allow the sharing of banking data for 4,500 clients of UBS AG (UBS: 14.27 0.00 0.00%) with the U.S. government. The clients are alleged to have evaded American taxes. The details of these clients are supposed to be handed over to the U.S. Internal Revenue Service by August this year.The approval was not easily reached. A number of Swiss parliamentarians challenged the deal, arguing that it is against the country’s bank secrecy tradition. The bill was also rejected earlier by the lower house of the Swiss parliament on demand for a referendum on the issue.
The failure to reach an agreement before the adjournment of the Swiss parliament would have complicated the dispute further. The IRS planned to pursue all legal options, including reviving the case against UBS if the Swiss government failed to approve the agreement and decline to provide information by the August deadline.
In order to avoid prosecutions and significant penalties, many U.S. clients of UBS AG have already voluntarily disclosed their accounts under an amnesty program of the IRS.Swiss banks have traditionally enjoyed large foreign deposit inflows as a result of the country’s tax system, which emphasizes extreme secrecy. However, the IRS’ lawsuit against UBS has questioned the banks’ privacy laws. Following concern over the dilution of its secrecy, UBS AG is experiencing large fund outflows as worried clients look for a safer refuge. This approval also paves the way for similar deals of the U.S. government with other Swiss banks.
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