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Swiss Bill Facilitates End To US Tax Dispute

31 May 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Source: Ulrika Lomas (, Brussels)

The Swiss Federal Council has adopted a bill creating a legal basis for resolving its tax dispute with the US, without having to enact new legislation with retroactive effect or indeed having to resort to an emergency law.

According to the Swiss Federal Department of Finance, the "Federal Act on Measures to Facilitate the Resolution of the Tax Dispute between Swiss Banks and the US," will enable all banks that wish to resolve their relationship with the US authorities to cooperate with the US Department of Justice (DoJ), based on a framework specified by the DoJ.

Designed to resolve the issue of undeclared assets held by US citizens in Swiss banks, the bill authorizes banks to cooperate with the US authorities and to make available the information necessary to safeguard their interests. This includes, in particular, information about business relationships concerning US persons and details of people who were involved in the US business of the respective banks. Client data, including account information, is not covered by the authorization. The disclosure thereof will occur exclusively within the scope of administrative assistance procedures based on a valid double taxation agreement.

Banks that cooperate with the DoJ will be obliged by law to provide maximum protection for their employees. This protection includes the obligation to provide prior information, safeguarding of employees' rights to information, the obligation to provide for employees' welfare under labor law and protection against discrimination and dismissal. The banks and their interest groups will be required by law to conclude an agreement with the relevant employee associations, which satisfies these minimum requirements.

With the proposed legal basis, the Federal Council is assuming its responsibility in relation to the financial center, banks and their clients and employees, as well as third parties active in a similar way with regard to such business relationships. If banks were not authorised to cooperate with the US authorities, the initiation of further criminal investigations or charges concerning banking institutions could not be ruled out. The uncertainty for the financial center would continue to exist.

The draft legislation to be dealt with in both chambers during the upcoming summer session in a special procedure, and is to enter into force thereafter. The urgency is due to the fact that the US is unprepared to wait any longer and the implementation of the legal provisions is to be restricted to one year.

The Swiss Bankers Association (SBA) has taken note of the Swiss Federal Council's decision, underlining that it is "positive that the Federal Law offers the banks the opportunity to settle their tax-related issues in a legal and definitive manner."

The SBA states: "The transfer of data from bank employees to the US is an important element thereof. The SBA has always strongly advocated that this process be constitutionally assured and that the protection of the affected employees be ensured to the extent possible. The SBA is therefore pleased that an agreement has been reached on the matter together with the Employers Association of Banks in Switzerland (AGV Banken) and the Swiss Bank Employees Association (SBPV)."

The SBA nevertheless highlighted its concerns about the fact that no information whatsoever regarding the scheme that the US will offer the Swiss banks is available.

Concluding, it warns: "The size of the fine is an important criteria for the Swiss financial center. We firmly repeat our demand that the Swiss Federal Council must continue to make every effort to find a solution that stands in proportion to the transgressions being alleged."


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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