Swiss strike tax deal with U.S.

By Sam Cage and Sven Egenter
ZURICH (Reuters) - Switzerland and the United States have reached agreement on a double taxation treaty, the Swiss finance ministry said on Friday, a key step toward removal from a list of tax havens.
Switzerland, whose private banks manage around $2 trillion of foreign wealth, aims to secure 12 new bilateral tax deals by the end of 2009 which could allow it to be removed from an OECD "grey list" of states which need to improve tax cooperation and avoid possible sanctions from G20 nations.
Talks with Washington are particularly crucial for Berne as U.S. authorities have accused Swiss bank UBS of helping rich clients to hide money in secret Swiss accounts. UBS is losing clients because of the bad publicity.
While the Swiss-U.S. agreement had never been dependent on solving the case against UBS, it could prove difficult to force through parliament without a solution, a spokesman for the Swiss Finance Ministry said.
UBS shares reversed losses after the news and were 1.3 percent higher at 14.69 Swiss francs by 1334 GMT (9:34 a.m. EDT), roughly in line with the European banking sector.
"That has brought hope that a solution for the UBS tax dispute will be found soon," one trader said.
"It's good news, in a way, that there are discussions," said Teresa Nielsen, an analyst at bank Vontobel. "But we would probably have to get more details on what is actually in the double tax agreement."
UBS declined to comment.
Under pressure from the G20, Switzerland agreed in March to relax its prized bank secrecy and accepted for the first time to share certain bank client data with other jurisdictions once bilateral tax treaties are ratified.
The U.S. deal is in compliance with OECD guidelines, the ministry said.
"The decision will permit an exchange of information on tax matters in individual cases where a specific and justified request has been made," it said in a statement.
It is the sixth such agreement the Swiss have struck, after Denmark, Norway, France, Mexico and one other unnamed country.
SECRECY
The U.S. government is suing UBS to retrieve thousands of names of American clients who allegedly stashed money in secret accounts in contravention of U.S. tax laws.
UBS is fighting the civil suit and says compliance would require its employees to commit fraud in Switzerland, which jealously defends its bank secrecy legislation. Continued...
Source: Reuters