US, UBS reach deal over tax dispute
Government reaches agreement with UBS bank over long-running tax evasion case.
Secrecy battle
Details of the deal are not yet known, but it is expected that UBS will give US authorities the names of US citizens who had deposits in the bank.
US law forbids its citizens from evading tax through harvesting assets in offshore accounts.
The announcement comes nearly two weeks after the two sides said they had come to an agreement in principle.
US authorities had called for the release of 52,000 names of people suspected of holding deposits in UBS, but it is not clear how names might be revealed under the deal.
UBS, which the second-biggest bank in Europe by market capitalisation, had argued that releasing the names would contravene Switzerland’s secrecy laws – the cornerstone of the country’s banking sector.
‘New battle’
Milan Patel, a tax lawyer at Withers LLP in Geneva, said that any agreement to turn over the names of US depositors in UBS to the US government could lead to further lawsuits.
“This may mean that UBS could face a new legal battle in Switzerland if the account holders claim UBS violated Swiss bank secrecy laws by disclosing their names,” Patel said.
“Thus, UBS may have ended the US legal battle only to start the Swiss legal battle.”
Doug Shulman, commissioner of the Internal Revenue Service, the US tax collection agency, said “we are pleased to have initialled an agreement with the Swiss government which protects the United States government’s interests.”
UBS agreed in February to pay $780m to settle criminal charges in another tax dispute with the US government.
As part of that deal, it said it would hand over information related to about 250 US clients who held accounts in the bank.
The company also said that it would stop US clients from holding any of its offshore accounts services.