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Friday, May 01, 2009

Switzerland claims suit seeking UBS customer data violates sovereignty
Jaclyn Belczyk at 4:33 PM ET

[JURIST] The Swiss Federal Office of Justice [official website] on Friday announced that it has filed a brief in the US District Court for the Southern District of Florida arguing that a lawsuit filed by the US Department of Justice (DOJ) and the Internal Revenue Service (IRS) [official websites] seeking information on 52,000 UBS [corporate website] account holders suspected of tax evasion violates its national sovereignty as well as Swiss banking law. The Swiss government is not a party to the case and as filed the brief as amicus curiae. The Swiss government has also expressed concern over the potential ramifications of the lawsuit on negotiations [Reuters report] with the US to revise the tax treaty [text, PDF] between the two countries.

In March, the Swiss government it will follow standards [press release; JURIST report] set by the Organisation for Economic Cooperation and Development (OECD) [official website], adopting a more stringent definition of tax evasion and agreeing to cooperate with other countries in evasion investigations. Unlike many other countries, Switzerland differentiates between tax fraud and tax evasion [NYT report], and tax evasion is not a crime. While this policy has not changed, by adopting the definition of tax evasion under Article 26 of the OECD Model Tax Convention [text, PDF] Switzerland will henceforward share information "with other countries in individual cases where a specific and justified request has been made." The Swiss government also made clear that by adopting the OECD definition it was not ending bank secrecy. A statement [press release] by the Federal Department of Finance on Saturday said that while the situation for non-resident foreigners has changed, the "decision will have no bearing on legally resident foreigners in Switzerland." Owners of Swiss bank accounts have traditionally enjoyed great privacy, but Swiss banks have recently released information on certain clients. Earlier in March, UBS closed more than 14,000 accounts [USA Today report] owned by US citizens following a court settlement over accusations it assisted its clients with tax evasion.

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