The Swiss Federal Council has approved an amending protocol, revising the controversial “UBS Treaty”, which regulates the transfer of data on 4,450 UBS clients suspected of concealing money from the US tax authorities. Until the new treaty is adopted by the parliament, no information will be passed onto the US.

The amending protocol raises the treaty to the same level as a double taxation agreement, while it was formerly considered a convention, the Swiss federal office of Justice said; the new treaty takes precedence over older conventions.

The new agreement permits Switzerland to provide treaty assistance in cases not only of tax fraud, but also of continued and serious tax evasion. This will prove controversial as it appears to contradict Switzerland principle of double criminality, which states that a foreign state can only ask Switzerland for administrative assistance in cases which are illegal in both countries. Famously, tax evasion is not a crime in the Alpine state.

Amending the protocol became necessary after the Federal Administrative Court's judgment of January 27 blocked the original treaty, saying that data on cases of tax evasion could not be handed over to the US. This affected about 4,200 of the 4,450 cases.

There is no guarantee that the court will accept the new agreement, but this will only be seen at a later stage.

The treaty will be provisionally applied, even before it has been passed by  parliament. This uncommon legislative procedure is possible under Swiss governmental and administrative organisation law in certain urgent cases concerning safeguarding Swiss interests.

Nevertheless, it will have to be passed by both chambers of the Swiss parliament, where it can be expected to lead to much controversy.

No data will be handed over to the US, until the parliament has approve the treaty, which may happen in June. However, exceptions will be made when the person concerned has given consent to the data transfer, or has reported to the US tax authority, the IRS, under the latter's voluntary disclosure programme.

Because the treaty has been implemented, Switzerland will restart to investigate which cases will be send over to the US, to be ready when parliament has made a decision. The Swiss Federal Tax Administration could not do this if the treaty had not been provisionally implemented.