Further to my post last Sunday here at IBS, SWAT–Switzerland IGA: Still not enough information available in Switzerland, I received a reply email from the Swiss State Secretariat for International Financial Matters (SIF) yesterday. I stand corrected: it seems that I didn’t search hard enough on the Swiss Federal Authorities site (admin.ch) and that not only the agreement text is now available in Swiss national languages, but also a “law of application” has been drafted to enforce the agreement. From what I understand, Parliament will be formally informed of the package to vote on by 15 March 2013, but is not expected to vote on the issue until next summer. It would appear that the Cantons, Communes, Political Parties, etc. are expected to provide feedback by 15 March and this feedback will go to Parliament in some formal fashion, but of course this does not preclude lobbying directly to deputies outside of the formal consultation procedure between now and the vote next summer.
The responses from SIF were embedded in the body of the text of my original email to them, so I am reformatting for sake of simplicity. The following blockquote contains English translation of my original questions in Bold, SIF responses in Italics, and my translation of these responses in normal text.
*** 1st Email to SIF ***
I find it unusual that your press release does not contain links to final FATCA regulations and the text of the FATCA [IGA] agreement
– Vous trouverez le texte de l’accord en annexe du communiqué que vous mentionnez (http://www.admin.ch/aktuell/00089/index.html?lang=fr&msg-id=47779, cliquer à droite) ainsi que sur le site internet même du SFI (http://www.sif.admin.ch/themen/00502/00807/index.html?lang=fr; cliquer à droite).
“You will find the text of the agreement annexed to the press release that you mentionned…”
– En outre, les Final Regulations du Trésor américain figurent elles aussi sur notre site internet (tout en bas à droite) comme sur le site de la Chancellerie fédérale, auquel vous accédez via le communiqué (voir lien plus haut, cliquer sur « documents destinés à la consultation).
“You will find as well the FATCA Final Regulations of the American [Department of] Treasury on our internet site (right ‘sidebar’) as on the site of the Federal Chancellery where you accessed the press release ‘documents destinés à la consultation'”
The implications of FATCA in terms of its complexity as well as the dangers posed by its application require a deep analysis on the part of the Swiss People and its elected deputies in Parliament. It is also not evident if Parliament will debate the issue during the March 2013 session, or later. Would you have information about this?
– Le Conseil fédéral soumettra le message au Parlement une fois la consultation terminée (celle-ci échoit le 15 mars). L’examen parlementaire ne commencera donc qu’à la session d’été.
“The Federal Council will submit the message to Parliament as soon as the consultation is finished (deadline 15 March). Parliamentary debate shall therefore not commence before the Summer Session.”
Also, how can it be that the Federal Council signs such an agreement without obligatory referendum [popular vote] (Art 140a,b, 141a CFS) accompanied with the neccesary modifications to the Constitution, in light of the fact that FATCA is incompatible with multiple proections guarantied in the Constitution, for example: Freedom of economic activity, anti-discrimination, right to family? Let alone the law which deals with the question of dominant nationality (RS291 Art 23). If the FATCA agreement is approved, the result would be adhesion to a supernational community because the American judicial principle in tax matters ‘Last in Time Rule’ permits American authorites to change the rules of the game when they want, despite treaties, conventions, and agreements. And thus, the Federal Concil is not acting in good faith and does not want to protect the Swiss against arbitrary treatment (Art 9 CFS).
– La mise en œuvre de FATCA ne nécessite pas de modification de la Constitution. FATCA ne constitue pas une adhésion à une organisation supranationale. Le référendum facultatif est donc toujours possible.
Les institutions financières devront respecter les règles et leurs modifications futures. Toutefois, le texte de l’accord primera les règles détaillées si celles-ci sont en contraction avec l’accord.
“The implementation of FATCA does not require modifications to the Constitution. FATCA does not constitute an adhesion to a supernational organisation. Optional referendum is still possible.”
“Financial institutions will be required to respect the regulations and their furture modifications. In any case the text of the agreement will take precedence over the detailed regulations if these are in contradiction with the [IGA] agreement.” [Visibly Mrs Césard does not understand ‘Last in Time Rule’].
An acceptation of an extraterritorial foreign law such as FATCA is a clear violation of the constitutional mandate ‘The Swiss Confederation protects the liberty and the rights of the people and insures the independance and the security of the country.’ (Art 2 Line 1 Swiss Federal Constitution)
– Les établissements financiers mondiaux – et pas seulement suisses- devront appliquer FATCA à partir de 2014, indépendamment d’un accord conclu entre leur pays et les Etats-Unis, s’ils ne veulent pas être exclus du marché américain des capitaux. Cela concerne non seulement les grands établissements, mais aussi les petites et moyennes institutions, car les banques conformes à FATCA mettront fin à leurs relations d’affaires avec celles qui n’appliquent pas FATCA.
L’accord conclu entre la Suisse et les Etats-Unis prévoit des allégements importants pour les établissements financiers suisses dont ceux-ci seraient privés si l’accord n’entrait pas en vigueur.
“Worldwide financial institutions – and not just Swiss ones – will be required to apply FATCA starting in 2014, independanty of whether or not an agreement [IGA] is concluded between their country and the United States, if they don’t want to be excluded from American capital markets. This concerns not only large [financial] institutions, but also small to medium sized institutions, because banks that comply with FATCA will cease business relations with those that do not comply with FATCA.”
“The agreement concluded between Switzeralnd and the United States forsees important simplifications for financial institutions that they would not have if the [IGA] does not come into force.”
My original email was sent to firstname.lastname@example.org (+41 31 322 46 16), but was replied to by:
Départment fédéral des finances DFF
Secrétariat d’Etat aux questions financières internationales SFI
Bundesgasse 3, 3003 Berne
Tél. +41 31 322 62 91
Mobile: [redacted, I don’t want to upset her with calls from angry Brockers in the middle of the night… at least not yet]
Fax: +41 31 323 24 02
The Pending Consultations Page of the Swiss Federal website contains a number of links to documents destined for consideration by Parliament (you have to scroll down), here is a translation of the blurb paragraph and a copy of the links for convenience:
Agreement between Switzerland and the United States seeking to facilitate the implementation of FATCA and proposed federal law for the implementation of stated agreement
Authority: Federal Council [President and Cabinet] Form: Written Procedure
The agreement on FATCA (Foreign Account Tax Compliance Act) should permit the United States to effect the taxation of accounts held abroad by persons subjected in unlimited manner to US taxes [I don’t understand what ‘unlimited manner’ means here]. Switzerland has signed an agreement with the United States seeking to facilitate the implementation of FATCA within its territory. Certain obligations contained in the agreement must nonetheless be codified in a federal law.
Deadline date: 15.03.2013
Proposed Federal Law (French): http://www.admin.ch/ch/f/gg/pc/documents/2330/FATCA-mise-en-oeuvre_Loi-federale_Projet_fr.pdf
Text of the IGA (English): http://www.admin.ch/ch/f/gg/pc/documents/2330/FATCA-Implementation_Agreement_en.pdf
Text of the IGA (French): http://www.admin.ch/ch/f/gg/pc/documents/2330/FATCA-mise-en-oeuvre_Accord_fr.pdf
Accompanying Letter to Cantons (French): http://www.admin.ch/ch/f/gg/pc/documents/2330/FATCA-mise-en-oeuvre_Lettre-Cantons_fr.pdf
Accompanying Letter to Communes, Political Parties, etc. (French): http://www.admin.ch/ch/f/gg/pc/documents/2330/FATCA-mise-en-oeuvre_Lettre-Org_fr.pdf
List of addressees to which these documents are being sent: http://www.admin.ch/ch/f/gg/pc/documents/2330/Adressaten_destinataires_destinatari.pdf
For further information: Silvia Frohofer / Eric Hess tél: 031 324 30 20 / 031 322 76 70 fax: 031 323 08 33 e-mail: email@example.com;firstname.lastname@example.org
Note: The consultation page does not appear to have an English version, but one can switch to German or Italian in the upper right-hand corner
For readers’ convenience, here is a link to the FATCA final regs: https://www.federalregister.gov/articles/2013/01/28/2013-01025/regulations-relating-to-information-reporting-by-foreign-financial-institutions-and-withholding-on Also a link to the Swiss Federal Constitution in English.
What I find shocking is that although they are present in the IGA text, nowhere in the proposed Swiss federal law for FATCA implementation do I see a direct mention of the thresholds as in the original FATCA law and the final regs, to wit:
Accounts exempt from review. The final regulations exempt from review entirely all preexisting accounts held by individuals with a balance or value of $50,000 or less. This threshold is raised to $250,000 for preexisting accounts held by entities and for preexisting accounts that are cash value insurance and annuity contracts. In addition, the final regulations exempt insurance contracts with a balance or value of $50,000 or less from treatment as financial accounts.
Source: 78 FR 5876 FATCA Regs Page on Federal Register Website
16.03 JDT: It would seem however following my in-depth reading of the Swiss application law that these thresholds might indeed be respected, and might even be in force for new accounts. The law contains numerous mentions of the annexes to the IGA, but I am not sure if such references to the annexes will override the clear interdiction of Art 7 of the Swiss application law on new accounts without TIN and consent. I will be preparing a new article here at IBS with my in-depth analysis as I do not want to base myself on the explainatory report (http://www.admin.ch/ch/f/gg/pc/documents/2330/FATCA-mise-en-oeuvre_Rapport-expl_fr.pdf) SIF provided, but rather on the texts of the application law, and the IGA itself.
As to the higher thresholds for USPs in bone fide residence abroad, this would seem to be only as regards the reporting requirements of the individual, not of the bank. See: http://www.irs.gov/PUP/businesses/corporations/Summary%20of%20FATCA%20Reporting%20for%20US%20Taxpayer.pdf under “Reporting Thresholds” i.e. for residents abroad aggregate value at end of the year of USD 200k filing seperately USD 400k filing jointly, or USD 600k at any time of the year.
Our task now is to work to bring all of the documents relevant to the consultation to the attention of all Swiss voters. Also, anyone that can read French, German or Italian, please analyse all the documents and make your critiques and conclusions. I would ask all Swiss Brockers to write their deputies (National Counselors=Lower Chamber, Counselors of State=Senate), cite the present post and the documents I presented links for from the consultation page above, and express your opinions about FATCA and its constitutionality both in the US and Swiss senses, as well as the problems it poses for normal working people just trying to survive and save for retirement. You can also write to the email addresses of the various people at SIF that I mentionned above. Also, I don’t see why non-Swiss Brockers worldwide couldn’t also write the same people in English complaining that Switerland must resist and if it does pehaps other countries will follow suit and tell Uncle Sam to get lost.
You can find the addresses of members of Parliament here: Deputies/National Counselors … Senators in the Council of States IMPORTANT: You must choose the Canton, click on the deputy’s or senator’s photo, then on Biography to get their email address. Brockers outside Switzerland might want to address their emails to deputies from Cantons containing big financial or international centers such as Geneva, Basel-City, Vaud, Zürich.
I will be copying this present post at IBS via email or blog to SwissRespect, ACA, AARO, Maple, CCLA, all major Swiss political parties, the FATCA Forum, Phil, Allison, Jack, Steven, Jim Jatras, etc. I will also be sending a followup email to SIF with some further questions, and will publish it in the comments below