Switzerland court rules UBS may not disclose US taxpayer's financial information

[JURIST] The Swiss Federal Administrative Court [official website, in French] ruled [judgment, PDF, in German; press release, PDF, in French] Thursday that an American taxpayer's financial information at Swiss bank UBS [corporate website] may not be disclosed to the US Internal Revenue Service (IRS) [official website] pursuant to an August 2009 agreement [text, PDF; JURIST report]. The court ruled in favor of an undisclosed American taxpayer, who appealed a November decision by the Swiss Federal Tax Administration (AFC) [official website, in French] that would have allowed the disclosure. The Federal Administrative Court considered that in light of the Vienna Convention on the Law of Treaties [text, PDF], the current US-Switzerland double taxation convention [text, PDF] controls the subject matter of the case. The 2009 agreement under which the AFC acted does not supersede or amend the tax convention. The court also held that the American taxpayer's failure to file a W-9 form with information about her off-shore finances is akin to failing to declare taxes, even if it pertains to significant amounts of money, and does not rise to the level of tax fraud, which would grant US authorities access. The decision applies to the cases of 25 other American clients of UBS and may not be appealed to the Federal Supreme Court [official website, in French].

The Swiss Federal Administrative Court ruled [JURIST report] earlier this month that the Swiss Financial Market Supervisory Authority (FINMA) [official website, in German] violated the law in February 2009 when it ordered UBS to disclose information to the US on more than 250 of the bank's clients without the authority to do so. In September, the US and Switzerland signed a treaty [JURIST report] that would increase the amount of information shared between the two nations on would-be tax evaders. The agreement, constructed in accordance with Article 26 of the Model Tax Convention [text, PDF], came one month after a Swiss banker and lawyer were indicted in US federal court [JURIST report] for helping clients hide assets. In March, the Swiss announced their intention to adopt a more stringent definition [JURIST report] of tax evasion and to work with other countries to investigate such claims.



 

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