Details Of UBS' US Clients Should Not Be Divulged - Swiss Legal Expert

Osmond Plummer

10 February 2009

One of the most highly respected Swiss tax experts argues that details of UBS clients in the US should not be passed to US authorities because these clients have not committed tax fraud as defined by Swiss law.

UBS has been accused in the US of allegedly helping wealthy US citizens to dodge paying domestic taxes. A difficulty in cross-border issues surrounding tax is the different legal systems that can result in conflicting opinions or rulings. The US authorities can struggle to understand the Swiss distinction between tax evasion - which is not a criminal offence in Switzerland - and tax fraud, which is. To the US administration they are one and the same thing.

To add to the uncertainty in this case, Urs Behnisch a recognised Swiss tax expert and law professor at Basle University, recently published an opinion on the on-line review Jusletter (www.weblaw.ch) which concludes that the US clients of UBS have not committed tax fraud under Swiss law and that their details should therefore not be transferred to the US authorities.

This opinion clearly distinguishes between omitting a part of a person’s assets on the tax return and tax fraud using false documentation, for example. Any final say in the matter, according to Professor Behnisch, belongs to the Swiss Federal Tribunal, although an individual remains at liberty to reach any agreement that he wishes with the US authorities.

It seems unlikely that the professor’s opinion will be ignored given his long standing connections with the government in respect of taxation matters.