September 30, 2013 by Ellen WallaceBERN, SWITZERLAND – The urgency for Switzerland to sign an agreement to work with the US Fatca law may have been exaggerated, with Bern announcing 30 September that Swiss banks have six months of grace to implement it.
Fatca is scheduled to go into effect in January 2014 but for the umpteenth time the complex Foreign Account Tax Compliance Act start date has been pushed back.
Entry into force of FATCA agreement between Switzerland and United States delayed by six months
Bern, 30.09.2013 – Switzerland and the United States have amended the FATCA agreement in line with the new timetable for FATCA implementation by means of an exchange of notes. Swiss financial institutions now have to implement FATCA from 1 July 2014 rather than from 1 January 2014.On 12 July 2013, the US Department of the Treasury announced that FATCA implementation by foreign financial institutions would be postponed by six months. As the FATCA agreement signed between Switzerland and the United States on 14 February 2013 was based on the earlier timetable with commencement on 1 January 2014, it had to be adjusted to the new schedule.
This amendment lies within the authority of the Federal Council and assures Swiss financial institutions the same implementation deadlines as financial institutions in other countries. The agreement was amended by means of an exchange of notes. The amendment will enter into force at the same time as the FATCA agreement.
The agreement was approved and the implementing act adopted in the final vote of parliament on 27 September 2013. The changes necessitated by the postponement are taken into account in the federal decree and in the act. The FATCA agreement and the implementing act are subject to an optional referendum.
The Federal Authorities of the Swiss Confederation
It is no secret that the “urgency” has been exaggerated. It is common knowledge that Switzerland has been threatened into signing up to FATCA so that other nations would be more easily scared too.
The article is somewhat incorrect. The IRS has delayed FATCA until July 2014 anyways. We haven’t heard about the USG signing any IGAs lately. Could they be struggling to expand beyond the original ones?
This is not new news.
In Switzerland, it is new news. Don’t ask me why. I kind of get sick when I listen to the topic, so I usually ignore it. But, it is all over the Swiss press today:
Steuerinformationen fliessen später in die USA
http://www.srf.ch/news/schweiz/steuerinformationen-fliessen-spaeter-in-die-usa
L’entrée en vigueur de Fatca reportée de six mois
http://www.letemps.ch/Page/Uuid/73095566-29b4-11e3-ab60-afded6283273/Lentr%C3%A9e_en_vigueur_de_Fatca_report%C3%A9e_de_six_mois
CH/FATCA-Abkommen wird sechs Monate später in Kraft treten
http://www.finanzen.ch/nachrichten/aktien/CH-FATCA-Abkommen-wird-sechs-Monate-spaeter-in-Kraft-treten-667488
FATCA-Schonfrist für Banken verlängert
http://www.20min.ch/finance/news/story/FATCA-Schonfrist-fuer-Banken-verlaengert-14948793
They need to take it back to the drawing board. One: Go after those living in the U.S. with actual hidden off shore accounts. 2.) Find a way to tell the difference between those long term expats living in high tax countries with zero U.S. assets and criminals. 3.) Use RBT for long term expats as a start.
It would be very easy and far more economical for them to take some small reasonable steps towards doing what they feel they need to do and not sweeping in minnows, krill and microscopic beings of all sorts all over the globe.
Explanation as to why it’s news:
http://www.fsitaxposts.com/2013/10/01/entry-force-fatca-agreement-switzerland-united-states-delayed-months/
Frederic Oudea, the CEO of the large French bank, Société Générale, is quoted in early October as saying that due to reforms, FATCA is no longer needed:
“The crackdown has effectively meant that an incoming U.S. law requiring foreign banks to surrender information on U.S. account holders has become unnecessary, Oudea said.
The Foreign Account Tax Compliance Act, or FATCA, was enacted in 2010 but takes effect in July 2014. It requires foreign financial institutions to tell the U.S. tax authorities about Americans’ offshore accounts worth more than $50,000.
“What is happening today, particularly in Switzerland, makes this law unnecessary,” Oudea told BFM.”
This reasoning would allow the US government to save face if it finally admits that FATCA is not implementable.
http://www.reuters.com/article/2013/10/08/socgen-tax-idUSL6N0HY14Z20131008
A blogger at Tax Research UK, Richard Murphy, has a different opinion:
http://www.taxresearch.org.uk/Blog/2013/10/08/societe-generale-says-the-days-of-tax-havens-are-over-which-is-laughable/comment-page-1/
Here is a well-written comment by “MRubio” pointing out the difficulties the US faces in offering reciprocity to other countries:
“Mr Murphy,
Automatic exchange will not happen, not because of Switzerland’s opposition, but because the US Congress will not agree to it.
The US government has been trying to offer automatic information regarding some narrow categories of income to the UK and other countries to reciprocate the information it is demanding under FATCA. The House of Representatives,in a rare display of bi-partisan unity, has blocked the necessary legislation of even going to a vote.
In addition, the Federal government does not have a legal basis to compel states such as Delaware to maintain and/or disclose registers of beneficiary owners of companies, which makes it impossible for the US government to exchange information about any income received by non-resident beneficiaries. A bi-partisan initiative led by Sen. Levin and Baucus has introduced a bill in the Senate to change this, but it has nowhere near the 60 votes required to pass the Senate (not to mention the House, of course).
In summary, the country that represents 40% of economic output, dominates the global financial services industry, controls the world’s sole reserve currency and hosts the deepest and most sophisticated capital markets, will not apply automatic exchange of information. This is the unfortunate reality.”
A comment from “Paul” that found resonance with me:
“I’ve heard speculation for several weeks now that the entire FATCA plan will soon hit the buffers.
Will the rest of the world do it without the US? I wouldn’t stake my mortgage on it.”
@Innocente
The stage is being set to allow the US to bow out of FATCA gracefully (I hope).