If U.S. stops prosecuting UBS, Switzerland will sign a new tax agreement

According to the Swiss sources, the U.S. government was requested by Switzerland, famous for strict bank secrecy, to drop a legal tax case against UBS AG in return for passing a new tax accord between the two countries. On Tuesday, The U.S. is to begin talks with Switzerland on a bilateral tax agreement. 

Recently UBS reached an agreement with U.S. authorities, according to which the bank agreed to pay $780 million in penalties and restitution to avoid criminal prosecution in connection with helping wealthy Americans hide accounts and evade paying taxes. However, the U.S. still pursues data on more than 50,000 U.S.-based clients of UBS through civil means. 

As Swiss President Hans-Rudolf Merz stated in Washington, he believes U.S. Treasury Secretary Timothy Geithner understands the Swiss position; however, he didn’t give the definite answer concerning the case yet. The Swiss official considers it would be very difficult to bring the accord to Parliament for approval in the mid of the case process.

Switzerland is in the process of renegotiating dual tax agreements as part of concessions it made on banking secrecy. These talks also include accepting the standards of Organization for Economic Cooperation and Development on transparency and information exchange.

UBS no longer provides wealthy Americans with offshore banking in the U.S. or financial services out of Switzerland.