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Switzerland To Allow Information Exchange In UBS Case

Friday, February 26, 2010

It has recently emerged that the Swiss Federal Council is to put the Administrative Assistance Agreement between Switzerland and the US, dated August 19, 2009, to the Swiss parliament for formal approval. The Federal Department of Justice and Police has therefore been instructed to prepare the corresponding Federal Council Message.

The Federal Council’s decision will allow Switzerland to fulfill its obligations under international law, and bring a final resolution to its legal and sovereignty dispute with the US.

According to the Federal Council, this process means that in any future appeals, the Court will then no longer be able to regard the UBS Agreement as merely a mutual agreement. Instead, it will stand as a treaty of the same status as the older and more general bilateral double taxation convention. Indeed, according to the general rules of interpretation, it would also take precedence over the latter. As a result, Switzerland will be in a position to provide treaty assistance not only in cases of tax fraud, but also in cases of continued and serious tax evasion.

According to the statement by the Swiss Federal Administration: “A number of formal amendments must be made to remedy the shortcomings in the Agreement that were established by the Federal Administrative Court. In addition, a further amendment - to be made following consultations with the Chairman of the responsible Committees - will allow the Agreement to be applied provisionally as soon as an amending protocol is signed.”

It continues: “This authority is granted to the Federal Council under the Federal Government and Administration Act in order to safeguard important Swiss interests in cases of particular urgency. The amending protocol is expected to be signed in March. The Federal Council will then submit its message on the UBS Agreement and the amending protocol to Parliament. In the view of the Federal Council, these treaty texts do not require an optional referendum, since the UBS Agreement concerns only one request for information and is limited in duration. Furthermore, unlike the revised bilateral double taxation convention, which is subject to an optional referendum, it does not govern future treaty assistance arrangements with the USA in the general and abstract sense. Rather, it resolves the legal and sovereignty dispute with the USA in a specific case.”

The Federal Administration has also made known that the Swiss Federal Tax Administration (SFTA) will immediately commence final decisions in cases of tax fraud, as well as negative final decisions in cases in which the conditions for granting treaty assistance are not satisfied. It will not, however, issue final decisions on the other cases. Furthermore, it will not transfer any data to the US Internal Revenue Service (IRS) on the basis of final decisions that have become legally enforceable, unless the person concerned has given their express consent. Once the amending protocol has been signed, the SFTA will also commence final decisions in cases of continued and serious tax evasion.

According to the Administration, by handling matters in this way, Switzerland will be able to process the US request for information by the end of August 2010 deadline, as set in the agreement. It notes however, that the SFTA will not pass any data on to the IRS until the UBS Agreement has been approved by Parliament. The only exceptions to this rule are those cases in which the person concerned has given their express consent to the data transfer, or has reported themselves to the IRS under the latter's voluntary disclosure program.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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