Tax officials ordered to stop UBS probe
BERN (Bloomberg) — A Swiss court ordered tax officials to drop two more cases involving UBS AG account holders, adding urgency to the government's effort to find a political solution that will preserve a data-sharing agreement with the US.
The Federal Administrative Court, in a decision published Friday, told Switzerland's tax authority to comply with an earlier ruling that blocked it from sending the US information on 26 UBS customers. The court in Bern said Switzerland may only lift bank secrecy rules when there is evidence of tax fraud.
The ruling increases pressure on the Swiss to find a way to salvage the agreement to hand over data on as many as 4,450 UBS account holders as part of a U.S. crackdown on tax evasion. Ministers said this week they will ask the parliament to approve the US settlement to get around the court rulings.
"It's a difficult time with many options and political pressures," said Wolfram Kuoni, whose Zurich law firm advises banks and entrepreneurs. "You've got to remember the government isn't led by one president, but seven ministers."
The two UBS clients involved in Friday's decision are among 26 covered by last month's ruling. The court said that the account holders' conduct, failing to complete tax forms or declare income, was tax evasion rather than tax fraud. Under Swiss law, tax fraud is a criminal offence, which allows the government to lift bank secrecy laws. Evasion is a civil matter.