Tags: Swiss | us | tax | Treaty

Swiss Lawmakers Approve U.S.Tax-Treaty Amendment, Aiding Talks

Monday, 05 Mar 2012 03:39 PM

 

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Switzerland’s lower house approved an amendment to a double-taxation agreement with the U.S., allowing so-called group requests in cases of suspected tax evasion or tax fraud.

The amendment to the 2009 tax treaty will enable U.S. authorities to obtain data on groups of American clients holding Swiss bank accounts without knowing their identities. Today’s vote in parliament in the Swiss capital Bern was 110 to 56, with 14 abstentions.

“What we are deciding on is not any kind of fishing expedition,” Finance Minister Eveline Widmer-Schlumpf told the house before the vote. “There must be clear evidence of wrongdoing by the client” and by the banks involved, she said.

Switzerland and the U.S. are holding talks to resolve an investigation involving 11 Swiss financial firms after the Department of Justice indicted Wegelin & Co. on Feb. 2 for allegedly helping customers hide money from the Internal Revenue Service. The amendment would “significantly increase” the amount of client data eligible for administrative assistance, the Swiss government said last month.

The amendment clarifies a September 2009 tax accord, which Switzerland signed after agreeing six months earlier to meet international standards to avoid being blacklisted as a tax haven by the Organization for Economic Cooperation and Development. While a 1996 agreement already allows the transfer of dossiers in cases of tax fraud, the new accord will extend group requests to tax evasion.

Administrative Assistance

Switzerland will grant administrative assistance, including for group requests, in cases where the U.S. tax authorities produce clear evidence of a suspected offense by a bank and can detail a “pattern of behavior,” according to the amendment.

Switzerland, the world’s biggest center for offshore wealth, is trying to change its image as a haven for undeclared assets following a crackdown on tax evasion by U.S. authorities. In the future, Swiss banks must ensure that foreign clients are tax-compliant in their home countries, according to proposals by the government.

The Swiss government must ratify the modified 2009 double- taxation agreement, covering cases starting in September of that year. The U.S. Senate also needs to approve it. Widmer-Schlumpf last week pledged that the treaty wouldn’t be ratified until both countries agreed on a solution to the negotiations involving the 11 banks.


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