Swiss parliament approves UBS-US tax deal

Switzerland's parliament backed a Swiss-US tax treaty crucial to the future of UBS AG, ending months of uncertainty over the deal and paving the way for renewed recovery at the Swiss bank.  

The two houses of parliament agreed not to stage a referendum on the issue after crisis talks on Thursday, meaning Swiss tax authorities should be able hand over on time to US counterparts the accounts of 4,450 UBS clients that Switzerland's biggest bank helped to dodge taxes.                                           
 

Berne and Washington cut the deal last August to end a damaging tax case against UBS, but its wealthy clients continued to leave in droves as the threat of further legal action loomed if Switzerland failed to deliver on its promises within a year.      
 

"UBS is finally off the hook and will regain ground in its wealth management business," said Sarasin analyst Rainer Skierka.                                            
 

Failure to hand over the client accounts in time would have broken the terms of the tax treaty and could have led to retaliation from the US government.                                            
 

"Parliamentary approval means that nothing now stands in the way of UBS client details being disclosed," the Swiss Justice Ministry said.                                           
 

UBS shares traded 2.26% higher by 0845 GMT, outperforming a 1% rise in the Stoxx 600 European banks index.                                           
UBS welcomed Swiss parliamentarians'' decision to back the deal.                                           

"UBS continues to focus on its comprehensive and timely compliance with all obligations ... and is confident that this will be achieved by the relevant deadlines in August 2010," it said in a statement.                                           

UBS has handed over the data to Swiss tax authorities for processing, as required by the United States, but a legal loophole prevented the Swiss passing on the data.                                           

A Swiss court in January blocked the data transfer, forcing the government to bypass that ruling with a legal patch that required parliamentary approval by both houses.                                            

Switzerland's largest party, the right-wing Swiss People's Party (SVP), shifted position at the 11th hour, allowing the lower house to back the deal without the referendum it had urged.                                    
The timetable for a referendum would have prevented the handover of the client accounts on time, breaking the terms of the tax treaty and risking retaliation from Washington.