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Updated 20 March 07:15  Bern, Switzerland (GenevaLunch) - In a short, terse message, the Swiss federal government Thursday evening announced that the United States has dropped its request for administrative assistance in the case of UBS, Switzerland’s largest bank. The extraordinary message is linked to a request for help with 252 UBS clients’ accounts, made in July 2008, which has caused a political uproar in Switzerland and been linked to tense relations with the US in the past eight months. No reason was given for the US dropping its request, nor is there any mention of a related civil case where a US court has asked for information on an additional 52,000 accounts. The New York Times 18 March reported that the US was extending its inquiry into UBS in the civil case, citing unnamed sources it referred to as “persons briefed on the matter.” Swiss federal statement in its entirety:

US tax authorities withdraw request for administrative assistance in UBS case

“The United States Internal Revenue Service has withdrawn the request for administrative assistance submitted in July 2008 in the case involving UBS. The official letter of withdrawal was received by the Federal Tax Administration (FTA) on 16 March 2009. The Federal Council acknowledged the move today. The withdrawal of the request means that there is no longer any legal basis for the administrative assistance proceedings. The FTA will therefore formally conclude its work on the case.

The UBS clients against whom proceedings have been started but who have yet to receive a conclusive ruling will be notified by the FTA of the closure of the proceedings. The FTA is to revoke the rulings already issued and declare them to be no longer valid.”

Earlier Thursday 19 March Switzerland announced that it will need to renegotiate double taxation treaties as a result of its decision to relax its strict rules on banking secrecy. According to Le Temps, the United States is likely to be the first country with which Switzerland reviews its current treaty, but Japan and France are also reportedly ready to renegotiate their treaties with the Swiss.

Background to US/UBS case, Bloomberg

Related: Reuters on statement earlier Thursday from the Swiss Federal Tax Administration

US Department of Justice statement, July 2008