Today, I learned from Raiffeisen that they do not refinance mortgages to “US persons”.
Expatica“We will soon shed those American clients who are taxable in the United States,” bank spokesman Franz Wuerth
On this, the US government writes:
U.S. Department of Housing and Urban DevelopmentHousing discrimination based on your race, color, national origin, religion, sex, family status, or disability is illegal by federal law. If you have been trying to buy or rent a home or apartment and you believe your rights have been violated, you can file a fair housing complaint.
According to the US government, it is housing discrimination and illegal under US federal law to deny an individual a mortgage based on their national origin. Raiffeisen is responding to US policy and thus the US government is responsible for creating a situation which discriminates against individuals of American origin in violation of US federal laws. Yet, Raiffeisen is not alone in yielding to this illegal discrimination against Americans pressured by the US government.
Investment EuropeCo-op, another retail bank, also announced it had stopped doing business with its US clients, according to the French news agency AFP.
This problem is not limited to one country. In violation of US federal laws, the US government is pressuring banks around the world to discriminate against American citizens, denying them the right to have a home.
Bank CainvestBank Cainvest offers private banking services to Non-US clients only.
Royal Bank of ScotlandAny brokerage and investment advisory services described herein are not intended for US Persons. Furthermore, any solicitation on this web site of retail banking services (including accepting and/or soliciting deposits), insurance services, mortgage and/or consumer lending services or credit card services is not intended for US Persons.
SwedbankThe Bank does not offer or sell investment deposit to US persons and the Client hereby confirms to the Bank that it is not a US person. The Bank has the right to terminate the agreement immediately if the Client is a US person or becomes a US person during the term of the agreement.
To counter this problem, the US government has several options:
- Switch to territorial taxation
- Reverse the current policy which is causing illegal housing discrimination
- Finance the homes and provide banking services to US persons abroad
- Encourage and expedite renunciations by paying US citizens to renounce their American citizenship.
Housing discrimination can be reported here.
Someone who was in contact with her should send this to Amy Webster.
*In the US compensation discrimination based on national origin is also illegal. US compensation anti-discrimination laws generally do not affect US employers and their US employees outside of the US. However, In countries with similar anti-discrimination laws it is generally illegal for employers to compensate US citizens higher than other employees who are not US citizens to reimbirse or otherwise help them cope with the additional tax costs that only persons with US citizenship have to bear when they are working in a foreign country. Even if the employer might be willing to do so because the person they want to fill a job opening happens to carry a US passport, they may find it illegal to do so.
This is an interesting post. It shows the actual stupidity and short-sightedness of the Obama administration and the Democrats in Congress for passing the HIRE Act and its FATCA provisions. Even if Congress reverses FATCA, betcha that these foreign banks, especially the Swiss banks, don’t reverse their policy. Damage has been done. All the foreign banks that have this policy are saying, “F-You USA!”
Well SwissPinoy, all I can say is sue them. This is their game and they are the ones creating the rules and pulling the strings of the banks.
One of my first wake up calls was maaaaannny years ago when I realised that the US Government doesn’t play fair: most of the time they have one set of rules for them and one set for everyone else.
US Treasury officials say that there is only *’anecdotal’ evidence of US ‘persons’ being affected – ex. refused financial services ‘abroad’. That includes those who have been refused mortgages, or had their mortgage renewals refused. Do the mounting numbers of official financial institution notices and policies rejecting US ‘person’ clients, and closing their accounts constitute only ‘anecdotes’ too? How many people need to be affected in order for it to be deemed ‘systemic’?
*See: “Treasury officials are aware of anecdotal complaints about FATCA
affecting U.S. citizens abroad, but they don’t see a systemic problem,
the Treasury official said.”
I know it’s not the topic of the post, but I’d like to have some opinions about the bill that I’m writing to replace citizenship with residence-based taxation. Maybe someone could move this to a different page if it gets too long. By the way, I’m about one third of the way through with the relevant sections in the Internal Revenue Code.
1. To define residence, I am using the current substantial presence test with all of its rules and exceptions. This is the definition that is currently used for foreigners without a green card, so I am just applying it to everyone. I am also adding an exception to consider US government or military employees abroad as residents, because their salaries are sourced in the US and they would pay higher taxes if they were considered nonresidents. I am also adding that US citizens and permanent residents who don’t satisfy the substantial presence test may elect to be treated as residents for tax purposes by simply filing the normal resident tax forms (1040). I understand that there are some cases where this may be beneficial, and I don’t want to increase taxes on anyone.
2. Because some people may elect to be treated as US residents even if not acually residing in the US, I am keeping the foreign earned income exclusion and the exclusion of income from US possessions available. It may be hard for you to imagine, but there are situations where using the exclusions is better than being a nonresident. For example, this occurs for those residing in a low-tax country or US possession who have income from US sources and a low total income.
3. To be consistent with the concept that citizenship should not be used for taxation, I am removing the requirements that certain dependents be “citizens or residents”. If I changed the requirements to only “residents”, some people might not be able to claim dependents that they currently claim, and again I don’t want to increase taxes on anyone.
4. Also to be consistent with eliminating the use of citizenship, I am repealing the sections that allow higher taxes on those whose country of citizenship or residence impose higher taxes on Americans. (I don’t think this provision has ever been used anyway.)
5. Again to be consistent, I am removing the requirement that the spouse be a US citizen for the estate tax exemption. I am also allowing the exemption from US estate taxes to all residents of US possessions, not just who were born there.
6. I was trying to restructure the exit tax based on termination of residence, but I decided to repeal it completely. My understanding is that the main reason for the exit tax in the US is not to collect revenue on unrealized gains, but to penalize rich people who renounce US citizenship to avoid taxes, because certain dual citizens, permanent residents with less than 8 years of residence, any residents only by virtue of the substantial presence test, and any people not considered “rich” are exempt from it, while those who do not certify current tax compliance are not exempt even if not “rich”. The whole idea of renouncing citizenship because of taxes does not exist in a residence-based system. One could argue that taxes would then be a motivation for terminating residence, but I’m not aware of any US state that imposes an exit tax. Some countries have foreign exchange control but not an exit tax per se. As far as I know, only Canada has a real exit tax, and the Netherlands can only impose it under a treaty with the new country of residence. I also don’t agree with taxing unrealized gains because they are not final and could decrease, just like what happened to Eduardo Saverin’s Facebook shares. Besides, the gains may be taxed by the new country of residence once realized; if it doesn’t tax capital gains, it probably collects more revenue from other taxes or other sources instead, or it spends less. Likewise, I decided to repeal the estate tax on inheritance from “covered expatriates”.
7. I am getting tempted to include in the bill a complete repeal of FBAR, FATCA and even the whole estate tax. It’s very easy to write “section #### is repealed”. But those are separate issues and I guess I shouldn’t try to fix everything, I don’t even know if my bill will be introduced at all. I think it’s better leave the unconstitutionality of the FBAR penalties for the courts to decide, a repeal of FATCA for the banks to lobby, and a repeal of the estate tax for the Republicans in Congress. Citizenship-based taxation is the issue that no one else cares about.
It’s honestly a loophole of sorts. They set a rule, banks in other countries interpret it how they feel is correct, unless there is a specific instruction directing them to do so, the banks are just protecting themselves. Does the law exist in your country? US law doesn’t mean shit once you are an expat.
Thanks to citizenship-based taxation and FATCA, an increasing number of foreign banks are treating American Expats like the Walking Dead.
what an undertaking. thank you for taking this project on.
@Shadow Raider, Sounds like you’re off to a good start. I can’t wait to read it.
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badger – how are notices on websites just “anecdotal”? That’s practically a rejection right there. Any American who submits an application is going to get denied. If they are still saying it’s anecdotal, then they are deflecting from negative side effects.
dan – as we’ve pointed out here, maybe before you came along, US law follows you around if you have any connection to the US whatsoever. For example: large European-based company is fined by the US for bribing European politicians. No US-Person was involved anywhere. I’ve seen cases where foreign politicians are indicted in the US for insider information and some other US laws. Other example: US wants to extradite British teenager for facilitating piracy, based on US laws. And the list goes on and on…
@Johnny Gringo: the walking dead in America actually get pretty good tax treatment:
Better than US persons abroad, anyway. And they can vote in Chicago too. Without having to report to the Department of Defense.
Dan, I’m sure that most countries have laws against discrimination, including this type of discrimination. The case of Switzerland is rather interesting because it is a “Rechtsstaat”, or a state under the rule of the law and I’m quite confident that this form of discrimination is illegal under Swiss law where it concerns Swiss citizens. Yet, as we can see here, US pressure is overriding Swiss law, causing Swiss company to discriminate against Swiss citizens against Swiss interests. The problem is likely that the Swiss economy is heavily international with a large chunk of it relying on the US, making it rather easy for the US government to force its interests upon Switzerland.
It was good to bring up the US housing discrimination legislation.
Once again, what the banks are doing is illegal (criminal) under Swiss law as well. I repeat my citation for the umpteenth time as it must not be forgotten.
Art. 261bis 1
Any person who publicly incites hatred or discrimination against a
person or a group of persons on the grounds of their race, ethnic origin
or religion, any person who publicly disseminates ideologies that have
as their object the systematic denigration or defamation of the members
of a race, ethnic group or religion,
any person who with the same objective organises, encourages or participates in propaganda campaigns,
any person who publicly denigrates or discriminates against another
or a group of persons on the grounds of their race, ethnic origin or
religion in a manner that violates human dignity, whether verbally, in
writing or pictorially, by using gestures, through acts of aggression or
by other means, or any person who on any of these grounds denies,
trivialises or seeks justification for genocide or other crimes against
any person who refuses to provide a service to another on the grounds
of that person’s race, ethnic origin or religion when that service is
intended to be provided to the general public,
shall be liable to a custodial sentence not exceeding three years or to a monetary penalty.
“American” isn’t a race religion or ethnicity.
Swiss Federal Constitution (RS101)
Equality before the law
1 Everyone shall be equal before the law.
2 No one may be discriminated against, in particular on grounds of origin, race, gender, age, language, social position, way of life, religious, ideological, or political convictions, or because of a physical, mental or psychological disability.
3 Men and women shall have equal rights. The law shall ensure their equality, both in law and in practice, most particularly in the family, in education, and in the workplace. Men and women shall have the right to equal pay for work of equal value.
4 The law shall provide for the elimination of inequalities that affect persons with disabilities.
Protection against arbitrary conduct and principle of good faith
Everyone has the right to be treated by state authorities in good faith and in a nonarbitrary manner.
Right to life and to personal freedom
1. Everyone has the right to life. The death penalty is prohibited.
2 Everyone has the right to personal liberty and in particular to physical and mental integrity and to freedom of movement.
3 Torture and any other form of cruel, inhuman or degrading treatment or punishment are prohibited.
Sure, however this is a business making a business decision, it’s not the government. Before the law, sure, equal. That doesn’t mean that a bank has to extend you credit or a loan or even do business with you. Due to US regulations, accepting US clients results in either a massive financial cost to comply, or placing all other clients at risk.
Equality before the law and Discrimination are two entirely different things. Your recourse is to cease being a US Person.
There have been a number of legal cases in Switzerland where ethnic-origin appears to be the same as nationality. Here are several I’ve located:
Yugoslavians and Albanians:
Turks and Jews:
If an American were to enter a restaurant and be denied service based on the fact that he/ she was an American, there would likely be a case. Banks seem to fall into another class, for some reason, and I am frankly uncertain whether a case of discrimination filed against a bank would be successful.
Not the same thing at all. By definition the US is multi-ethnic, as such, it’s just a nationality, it’s not an ethnicity. Furthermore, an accidental american would suffer the same fate.
If a store kicks out a customer because he’s not wearing any pants, the solution is not to whine bitch and moan about your rights to run around with pants on. The solution is to put on some pants. Renounce and get over with it.
The position of the banks is that all US persons will be denied banking services equally, and yes, of course, so will their spouses. (Maybe even their little dog too!)
@bubblebustin Spouses are now getting hit for sure (Amy Webster story an example, sorry to keep bringing you up Amy but I feel really sorry for you and your husband…. and you are tax compliant to the best of your knowledge I think you said… And this is how they reward you? By causing headaches for you and your family?).
Next thing they will go after our landlords, bartenders at our favorite watering hole, and neighbors who might not even understand a word of English. A few years ago when FATCA passed we had no idea spouses would be affected. If they are after spouses now, what next? Again, I say: Nuremberg law type situation.
@Dan The Art 261bis CPS discrimination argument is supplemented by plenty of other things in the Constitution: economic liberty, equal oppourtunity, non discrimination, obligation of the government to protect the independance of the country. The Constitution says what must and must not be done, Art 261bis CPS says what the punishment should be if what is done is done wrong.
I would be perfectly happy to take my blue book to Sulgeneckstrasse 19 in Bern and tell them to put it (où je pense) but they would probably arrest me as I have not declared my pension funds (which employers, banks, and Swiss government officials explicitely instructed myself and many others not to). And I suspect that they suspect who Jeff D. Tom really is, even if they can’t prove it beyond a shadow of a doubt. NDAA suspended by our brave Judge Katherine or not, no telling what the spooks would do to me if I set foot in that Embassy which is of course US sovereign territory like all embassies.
I am not a tax cheat, I pay Federal, Communal and Cantonal taxes. I earn nothing in the US. I am Swiss citizen domiciled in Switzerland and am not subject to the jurisdiction of the United States. I never chose to be a Yankee. I haven’t even set foot in the US in a decade and don’t want to live there, nor pay for their stupid wars. If the US wants to be a leader in the world, it should lead not bully.
@Jefferson D. Tomas: It seems the US Embassy in Bern in crawling with spooks. You may remember this article from Blick several years ago:
@Innocente I remember
reading something about this in the Swiss French news (Jawohl, ich bin Welsch,
und je suis fière d’être.) I remember as well that there was some outcry in the
press about some “extraordinary rendition” flights that may have
refueled in Switzerland or crossed over Swiss airspace. Who knows what the CIA
offices in Bern had to do with that (if anything, who knows what their mission
is, remember that Geneva is an important base for UN agencies. The CIA also
conducts intelligence gathering from public sources, as well as critical
analysis and study of the same, not just covert actions or espionage. The CIA
country reports are available free on the internet and although they may have a
strong American slant are actually somewhat useful to everybody– I’d pay a
franc for every country I looked at on their site, but not more.).
We all probably have heard
that private planes sometimes are met with different scrutiny than commercial
flights. Remember, neutral countries are often a place where foreign
intelligence officers hang out. I seem to remember that such was case in Sweden
and Switzerland and elsewhere during WWII and during the cold war. Sometimes
this can be good. I suspect that plenty of people from communist countries
managed to get to neutral ones and defect.
But it is the handful of
really nasty spooks that might be lurking in such a building in Bern that scare
me. Read Stieg Larsson’s Millennium trilogy novels and you’ll find a literary example.
*Don’t be so critical of the CIA. You know that the CIA is in Bern for one and only one reason — to protect those secret offshore billions of dollars said to belong to IBS folks in Switzerland. IBS just has to be patient. Eventually, the CIA will knock on our doors and hand over the account numbers and passwords to these stashed funds. It is for our own safety that they are keeping the money from us. If they informed us of these accounts today, then we’d have to report them to FATCA, they’d be double-taxed or even tripple-taxed and in the end there would be nothing left. Thus, the CIA needs thousands of agents in Bern to ensure that all of these secret billions will be safely deposited into our accounts when the right time comes. Just be patient.