Official Swiss Federal Press Release (English Version)
RTS article (in French): Un accord fiscal a été conclu entre la Suisse et les Etats-Unis
Translation of RTS article:
A Tax Agreement has been concluded between Switzerland and the United States.
An agreement has been concluded between Switzerland and the United States on the application of American tax law. The agreement would permit the taxation of the accounts of Americans abroad, but under certain conditions.
The United States and Switzerland have signed Monday an accord about the application of the American tax law known as FATCA. The President of the Confederation Eveline Widmer-Schlumpf announced so Tuesday before the Swiss Senate.
The agreement must still be approved by the Federal Parliament, said the Secretary of State for International Financial Questions on Tuesday. It will be also submitted to an optional referendum as a matter of international treaty.
The text of the agreement will not be published until it is signed, the Secretary of State for International Financial Questions stated while communicating the message of the President. President Widmer-Schlumpf hopes for an entry in force of the agreement in early 2014, and made the information public during the morning, the Senate was the first to know.
Tax Accounts Abroad
The American tax law would permit Washington to tax all the accounts held abroad by persons subject to taxation in the United States. The “Foreign Account Tax Compliance Act” (FATCA) obliges banks and insurance companies to sign an agreement with the American tax authority in which they engage themselves to reveal all the accounts held by Americans. If they fail to do so, such financial institutions must pay a 30% withholding or no longer accept American clients.
The Federal Council [Cabinet] preferred the option of a FATCA application with simplifications to be stated in an agreement.
In June, the United States and Switzerland already decided upon the gist of a common declaration. According to the declaration, social insurance, pension funds, and property insurance will not be subject to FATCA.
Swiss banks will be authorized to conclude an agreement with American tax authorities in order to respect the engagements in matter of data transfer about American accounts. But they will not be required to reveal by name those American clients who refuse to cooperate or to close their account.
Rapid administrative assistance will nevertheless be accorded for grouped requests concerning supplementary data about the accounts of non-cooperative American clients.
The number and the total amount of these accounts will be transmitted by the banks directly to the United States tax authorities. Switzerland diverges in this way from the model proposed by 5 large EU nations (Germany, France, Italie, Spain, United Kingdom) who rely on data transfer via a central governmental database.
*Here is the Reuters version:
Switzerland is giving while asking for nothing in return. I like this part:
This one has an interesting title:
The negotiated exceptions may be better than a complete acceptance, but on the other hand they do not require the banks to continue to serve USPs.
Nonetheless, I still cannot understand why Schlumpf cannot grow a decent pair of tits and tell the US officials to shove their bloody piece of anticonstitutional shit called FATCA where the sun don’t shine.
Perhaps she is hoping that the parliament or the people will vote no.
Uli Mauer (Swiss People’s Party i.e. Central Democractic Union) is expected to become president soon. He has never really impressed me, but maybe he will have the guts to resist. (P.S. as of 5 November, he has been elected President of the Confederation by Parliament)
What is meant by an optional referendum? Will Swiss citizens have to approve this? I know at least one Swiss citizen who would happily vote against this one 🙂
I keep seeing this ‘simplify” meme everywhere related to IGAs, but I think for the banks (not exempted or deemed compliant) that still have to do all the collection and transmittal work will hardly find it simple! And, of course, there is NO real reciprocity for the Swiss Treasury, so l hope they are NOT kidding themselves, but rather trying to put a ‘happy face” on it to hoodwink their politicians that they are just accepting a basic U.S. Cram Down!
Also, I note they call it a Treaty, which requires their parliament approval, but on the U.S. side, the IRS is trying to sneak all this through under the “Executive Agreement” charade so they can avoid the “Advise and Consent” process that actual “Treaties” require.
If they had to face Senators asking what this domestic FATCA is all about, (DATCA) which is supposed to grease this ‘Treaty” with reciprocity that the IRS is unilaterally imposing on U.S Banks, it might not pass muster!
I feel FATCA would die immediately, if at least some countries demand true and complete reciprocation from the IRS and US financial institutions. For example, both countries must agree for a day to mutual exchange of data and if one party fails, they day for mutual exchange must be postponed until other party is ready to exchange the data. Most democratic countries need to get the IGAs ratified by law makers. I feel, the US law makers would realize the costs when they have to take the same medicine.
I think rich tax evaders can hire smart lawyers to outmaneuver FATCA. May be they were already bought gold and diamonds and stashed away in safe lockers. That may be the reason gold prices were so high. When IRS got clue to such clever schemas they would demand more information returns weirder than FBAR to close all the loop holes squeeze last dollar from the tax-cheats (without considering the consequences on dual-citizen expats). This kind of cat and mouse game squeezes life out of middle class duel-citizens living in their native countries.
Swiss Federal Government press release on FATCA agreement:
Another blog post on the subject…
Switzerland Agrees to US FATCA Implementation!
So, here is what simplification means to the Swiss..
The initialed agreement provides for the following simplifications for significant segments of the Swiss financial industry:
The one simplification, that this IGA only applies to bona fide Residents of the American Homeland, would have been too simple, I guess.
@Edelweiss – this is from the official http://www.ch.ch website:
Art. 141 Optional referendum
If within 100 days of the official publication of the enactment any 50,000 persons eligible to vote or any eight Cantons request it, the following shall be submitted to a vote of the People:
So if someone gets up a petition demanding a referendum on this and 50,000 people sign it then it has to be put to the people to have the final say. Alternatively, if 8 cantons request that it be put to a referendum it will have to be voted on by the people. When the Swiss Parliament signs the treaty agreement it will then be officially published – and then the petition work can start.
It may be that the ACA will set something up possibly, but I really don’t know. It might be that some of the Swiss political parties might be against this invasion of Swiss banking privacy law and get a petition going.
They may also have to have a referendum on the tax agreement they’ve reached with the UK too I think.
Speaking of petitions, the Republicans abroad never got very far with their anti-FATCA one, and the Democrats told us that nothing could be done until after the election.
So Democrats Abroad, Obama got in again. You didn’t want to inconvenience him, and said it wasn’t a good time to wash dirty FATCA and US extraterritorial taxation and oppression of expats in public. Has our ‘right time’ come yet for you to bring it up in public and make some waves? Looks like FATCA wasn’t waiting until it was convenient for us abroad.
*badger, yes, funny. Thanks for the reminder! The only thing about Switzerland that dems abroad Switzerland has, is the word “Switzerland” and the Geneva election party.
The latest post is about counted ballots. No mention of banks, mortgages, FATCA, FBAR, IGAs, renunciations, etc. If one removed the word “Switzerland”, it could just as well be Hicksville, New York. Or is it?
@Edelweiss, adding my vote to that now makes it two! Only 49998 to go.
You’re right @swisspinoy; seems all it right with whatever world Democrats Abroad Switzerland is inhabiting. Where do its members bank? And do they all work for large government or US corporations where their employer does their US taxes and financial reporting for them in-house? Or are they using mood altering substances?
Don’t know where to put this, but since Switzerland ranks Number one, I thought I would place it here…
The lottery of life
Where to be born in 2013?
If a few more million figure out U.S. Citizenship taxation and all the FWhat? forms, it may slip below 16th next year!
As far as I am concerned, this REQUIRES a referendum (Art 140 CFS) because it requires constitutional changes in order to be applied (the rapid treatment of grouped information requests violates due process guarantees, especially in the case of duals). See also Art 141a which allows that the neccesary constitutional changes to implement a treaty be submitted via mandatory referendum to the people along with the treaty itself. This would have been the correct procedure.
Also for this reason, the current double taxation avoidance treaty with the US (which really enforces double taxation in the case of USPs) is unconstitutional as it was never voted on by the people and violates the constitution, especially as to duals.
Please everyone in Switzerland, write or call your local party officials (PS, UDC, PLR, MCG, PDC or whatever, ask them about the referendum). There is also the ASIN (Action for Switzerland Independant and Neutral) http://www.asin.ch/.
Switzerland, U.S. sign FACTA despite protests from Americans abroad
President Eveline Widmer-Schlumpf told the Council of States that the U.S. and Switzerland have signed the controversial Foreign Account Tax Compliance Act (FATCA). Parliament will have to ratify the agreement but if they do, and its likely they will, the accord will become law from January 1, 2014. When it does, banks and insurance companies will have to sign an accord with in which they will communicate details on all accounts belonging to American citizens to U.S. authorities or pay a penalty. World Radio Switzerland’s Pete Forster speaks to Jackie Bugnion, a tax specialist who is lobbying against FATCA on behalf of American Citizens Abroad:
I saw this excellent comment on Linkedin, that I thought I would post here…
Today’s Swiss “Tages-Anzeiger” newspaper carries an article called “US Passport makes job search difficult. A US law, hardly noticed until recently, is bringing new hardships for people with a US passport. For certain jobs, they are no longer hired by Swiss companies.” The US law referred to is FBAR. Article follows in German:
The American Embassy in Bern acknowledged that they had heard of this phenomenon but advised that it was not supported by available statistical data.
So, in addition to denial of bank services in Switzerland due to US law, Americans are “unerwünscht” as employees. We seem to be the new Jews: a. identified, b. marginalized, c. forced to leave the country? Can it be a small wonder that the run-rate for 2012 US citizenship renunciations in Switzerland is three times the 2011 rate?
An article in today’s Swiss “Inside Paradeplatz” on-line newspaper says that the Zürcher Kantonalbank in Zurich is cancelling the banking relationship with the Swiss-Cuban Chamber of Commerce to ensure compliance with the US embargo against Cuba (in German):
*Innocente, this is a good thing because it makes it more visible that Switzerland needs to cut its ties with the US. The next step is to vote in a new Swiss government which does not slave to US interests.
That Tages Anzeiger article is both fascinating and alarming. It appears that the US/Swiss dual citizen Robert Tanner (fictional name) was able to get a job at one of the large banks but only because he was also Swiss. That bank’s policy is it will no longer hire Americans. It took them nearly two months to clarify his citizenship situation before hiring him.
His employer had difficulty opening an employee bank account on his behalf within the bank despite the fact it is envisaged in his employment contract. He has come to the conclusion that he has little chance of advancing within the bank.
The article also raises an angle that I hadn’t seen discussed previously. If a non-US citizen who had authority over foreign accounts is sent to the US to work, this person may become a US person and create an FBAR disclosure obligation over the company’s foreign accounts. Presumably that’s only if the authority did not cease prior to moving to the US.
Does anyone know whether “Grossbank” is intended to cover one of UBS or Credit Suisse or whether it’s broader than that?
*Edelweiss, wiki lists UBS and Credit Suisse as being “Grossbanken”:
*Or major banks if you switch to the English version of Wiki. UBS is the largest with Credit Suisse second largest.
@Swiss Pinoy, Medea
Thanks. I suppose I should try searching on the internet before I pose the question.
It’s still not clear to me if the author intended the reader to believe it was one of the two “Grossbanken” or if it was just a fictional “Grossbank” (not necessarily Swiss) intended to be a large bank outside the top two. I’m guessing it’s the latter because the article doesn’t say it is “einer der Grossbanken” which would limit it to one of two. Either way, that’s a dramatic development if a major bank has a policy not to hire any Americans (unless also Swiss) in Switzerland. It doesn’t appear that the author confirmed the policy with the bank so it may be an unwritten rule but it certainly appears that “Robert Tanner” was told by HR that it is the bank’s policy going forward.
A new article in the Swiss press. Nothing new though:
Came across this fairly comprehensive tax compliance requirements for US Citizens filing returns while residing in Switzerland. Both the US and Swiss requirements are laid out. It is enough to want to make you stay home in Kansas. Mission accomplished..
Maybe someone can answer me this: does “The simplifications apply in particular to Social Security, private retirement funds and casualty and property insurances, which are exempt from FATCA, ” (see press release cited at the start of this thread) mean that ALL retirement funds are exempt, including the 2nd piller (not public, but managed by the employer), 3rd Pillar A (similar to IRA but with more restrictions)? My guess is that the Pillar 3B (flexible life insurance) would not be included, but it is an integral part of the retirement system as well. Some people hold their 3a in capital and their 3b as a risk insurance in case of death or other calamities.