October 16, 2013
From: Bilan, Switzerland
By Mohammad Farrokh
The Swiss are likely to vote to overturn a FATCA agreement with the US Treasury Department, which has recently been ratified by Parliament. On October 8, a STOP-FATCA referendum committee has been set up, amid skepticism and fears of US reaction. Direct link to access the referendum is here
[Note: FATCA (Foreign Account Tax Compliance Act) is a law requiring Swiss Banks to transmit the financial data of US expatriates, as well as many Swiss citizens, to the IRS. Original French (translated by Victoria Ferauge): Money & Finance “FATCA: un référendum pour briser la peur”]
There is an atmosphere of vague fears, mostly half-formulated and at best half-expressed: such as losing access to the American market or even reprisals against Swiss corporations. These fears have gone to the point of leading the Swiss Parliament to accept an Intergovernmental Agreement (IGA) with the US, which will not bring any benefit to the country other than averting retaliation.
Once started, however, a citizens’ referendum follows its own momentum. “Speculations about a Swiss referendum against FATCA had been a matter of international buzz on the Internet, already three days before it was actually launched,” said Laurent Franceschetti, a banking management consultant at SettleNext. He reckoned that the best allies of the Swiss referendum abroad might be found in the United States, where James George Jatras and his web site RepealFatca.com are following the gathering of signatures with a mixture of joy and hope. If the referendum committee manages to gather 50’000 signatures by January 16, the Swiss people will be called on to vote on the matter in the course of the first half of 2014.
FATCA opponents calculate that the Swiss referendum may slow down, where still possible, the process of IGA signing [Inter-Governmental Agreements] started by the US Treasury. But it seems to have slowed down anyway: since the agreement with Germany on May 31, no new IGAs have been signed. Admittedly, France’s IGA had been on the agenda for French Finance Minister Pierre Moscovici, when he was visiting the US in October 10-12 [but the signature meeting had to be called off because of the partial shutdown]. Without counting France, the Department of Treasury has scored only 9 IGAs so far.
Considering that at least thirty IGAs would be needed, in as many countries, in order for FATCA to be a success, it appears that the Department of Treasury is still far off the mark. One major country, China, has apparently declined to go along the road to an IGA.
“FINMA Will Enforce U.S. Law”
Closer to Switzerland, Austria does not hide its skepticism about FATCA, according to Philippe Nantermod, PLR/FDP [liberal-radical] representative in the Parliament of the Swiss State of Valais [the Swiss Canton where the Matterhorn is located]. He had first to give up his project of launching a referendum because the PLR/FDP youth, at Swiss Federal level, had refused to back him up last June. But he is striking back, thanks to the fact that the referendum has taken off anyway, under the auspices of the Ligue Vaudoise and with a more decentralized structure. He is still confident to win over the general assembly of the PLR/FDP youth, at a meeting due to take place in Berne on November 2.
In the meantime, the vice-president of Swiss PLR youth, Alain Illi, has already committed his personal support in favor of the committee overseeing the referendum. And Philippe Nantermod stated that the PLR/FDP youth of Valais will set up stands in the streets to collect citizens’ signatures.
The arguments in favor of the referendum are miscellaneous. For defenders of Swiss sovereignty, notably the Ligue Vaudoise [a Lausanne-based conservative association] but also the Lobby des citoyens of Marc Studer, as well as for Yves Nidegger [a VOP (conservative) federal MP], Switzerland should not set a precedent. And Philippe Nantermod pointed out that the Swiss’ taking up US tax law, including its updates, will set a precedent that the European Union will invoke to its advantage in the future.
As for the Parti Pirate, involved from the beginning in the referendum committee, it insists on the protection of privacy. And it has a point: data collected under FATCA will be spread throughout the many US government agencies. “Tomorrow FINMA [the Swiss banking regulation authority] will enforce US law, including its future evolutions – as when banks will be required to turn in the names of their employees, ” said Philippe Nantermod.
Banks Are Implementing FATCA
To this progressive nature of the FATCA agreement, supporters have few arguments to oppose except legal security, but this is failing to strike a chord. A possibly better argument, is that banks have already started to implement FATCA and that they will continue to do so, with or without referendum. While this is a reality resulting from the sheer weight of the US, it remains unclear why Switzerland should necessarily legalize this state of affairs, with the added risk of making it a legal precedent.
Even so, it is not certain that Swiss banks will apply FATCA for long, as it is doubtful that this American law will be implemented at all, unless a vast majority of countries accepts to participate – if anything because the costs are unsustainable: up to 3 billion dollars for the United Kingdom, according to an official estimate and perhaps 1 billion in Switzerland (although to date there are no reliable figures). All this in order to net $892 million for the IRS if the whole world were to play the game, which very likely it will not.
In the unlikely event that Swiss banks put up a fight, there is doubt that the United States would be in a position to put their threats into action. “If Swiss banks were barred from using US dollar transactions, then the commodity trading business in Switzerland would be disturbed; this might give even more arguments to those who are currently campaigning for the replacement of the Dollar with the Euro in international trade” says Laurent Franceschetti. As the American saying goes, the US Treasury Department would end up shooting itself in the foot.
Link to original posting on IBS regarding the referendum.
Thank you Marc for writing! That is a disapointment, and it looks like we got our hopes up too soon. Still, we’re going to beat this thing in Switzerland, and these parties will find themselves on the wrong side of history.
Hey folks, could be something good here:
SVP (UDC) are upset about the US spying out of Geneva:
L’UDC, elle, hausse encore davantage le ton et propose de suspendre l’application de l’accord FATCA, qui obligera les banques suisses à transmettre dès mi-2014 aux Etats-Unis des données sur leurs clients américains.
The SVP has upped the ante and suggests suspending application of FATCA …
Perhaps this will get the whole party to fall in behind the referendum?
why doesn’t every country in the world tell the US that they will withhold 30% on the US also.
If they say no, just tell them that they will not withhold 30% either. Case closed.
Now that will be interesting to watch. The US’s credibility is taking a real hit right now – shall we add extortion to spying in a growing list of no-no’s against their “friends”?
Frankly folks, we need to tie the disgust with NSA spying to FATCA capitulation (financial spying) every way we can.
Thanks @Lyboa for the link. I hope you are following the questions now (FINALLY) being raised in Canada by MPs.
They are by two MPs Hsu and Brison.
The Swiss Referendum folks could possibly use some of these… 🙂
@Just Me, yes. Canada is the main battleground.
The Swiss Federal Council have been rolling over like a puppy since 2009 asking Obama to tickle their belly. Hope the spying saga will elucidate whether he is friend or foe.
A friend from Switzerland sent me this…
It’s also mentioned in the Swiss-German press. Hannes Germann, the only one who voted against FATCA in the parliament (I think) is suggesting for FATCA to be suspended in response to the spying. The FDP president, Philipp Müller, thinks that such would hurt Switzerland. Albert Stahel says that the spying is nothing new and that the hype will calm down and continue on as if nothing happened.
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Has anyone got the latest on the Swiss referendum campaign and how close they’re to getting the 50,000 signatures? If they have to hold the referendum that might slow the FATCA train with potential IGA countries quite rightly able to say let’s wait for the Swiss first.
A NO would be a major setback putting the US in the position of being seen as a bully
I’m calling some of the contacts listed to see what the status is.
Just posting again to reach some Swiss readers..
What a headline…!!
Even Swiss Supermarkets are Coming Clean on U.S. Assets
Next will be “Swiss child care centers come clean”, as they are holding U.S. Persons children’s assets!
Their most precious assets!
In Canada, real estate brokers hold their clients property purchase deposits in their brokerage accounts as stakeholders pending closing. If it’s the same in Switzerland, should real estate brokers there ‘come clean’ also?
The Swiss NZZ newspaper reports today that the anti-FATCA referendum groups have collected between 25’000 and 30’000 signatures and need to collect 50’000 by January 16, 2014 to place it on the ballot. In other words, 2/3 of the time allowed has been used and they are at 50 to 60% of the signature goal:
I wish A.J. and his group the best in their endeavors!
Thanks for the update on the newspaper report link, Innocente.
So do most of us. I wish there were more we could do to help that happen. All our best to US Persons in Switzerland and others there who see the importance of this effort.
Thanks for that update. I’ve been wondering what the count so far is. Alas the final signatures on all petitions become exponentially harder to get. Keep trying though, Swiss friends. Good luck!
Congressperson Michelle Bachmann had first acquired Swiss citizenship together with her family, and then had renounced it at least for herself. Google the articles on your own.
Her hubby’s parents are Swiss, and they wanted to take advantage of the culture.
I have just yesterday given her a paper regarding citizenship based taxation, in person, in a 30 second meeting.
All US persons that are in Switzerland should all feel free to communicate (on facebook or however you imagine it) with her knowing that her family has swiss connections.
Factbox: Swiss banks and the U.S. tax crackdown
(Reuters) – A host of Swiss banks have signaled their readiness to work with U.S. officials in a crackdown on wealthy Americans evading taxes. Many more are expected to follow in the coming weeks, as Switzerland’s cherished bank secrecy slowly gets wound back.
Those of you who are French readers, see link and attached interview with James Jatras
Separately, for German readers:
or use google translate
My sole interest is getting the Marxist Income Tax done away with. I was raised by Socialists and know first hand how destructive the Marxists’ are to a fair and just society.
I have friends who are as interested in doing away with FBAR and FATCA and I support them, because the two of them has made the U.S. a much poorer country by doing away with a trade surplus right up to the time they were passes and now we are running a 3/4 trillion dollar trade deficit annually. That will make us a banana republic in less than 10 years.
Our current government is corrupt from Congress to The Executive and Supreme Court, Branches. It is even worse that we have a fourth branch that isn’t even mentioned in the U.S. Constitution. The permanent ”Civil Service” and I put them in quote because they are not civil and they sure don’t do us a service.
I first recognized the Income Tax as a nation killer in the 1980’s and started writing letters to politicians saying so. About the same time a group of Texans started to see the same thing. Now we have over a million advocates and we are all recruiting members at an exponential pace in all 50 states. We went from 4 or 5 sponsors to 74 House Cosponsors and 7 or 8 Senators. That won’t get the job done but the die hard among us want to refuse to vote for even a dog catcher who doesn’t like the FairTax so that when they get to a higher office they will already be on board. I am old enough that I probably will not see it become the law of the land, but I have children, grandchildren and great grandchildren whom I wish to live under a more just and equitable taxing system.
The countries that knuckled under to the IRS seem to me to have surrendered their soverignty as well as selling out the people who put them into office.
The U.S. Rep. in the U.N., Susan Rice, not knowing what her boss had done, made an impassioned speech to the General Assembly critical of the small African Country of Eritrea who pass a law to tax their citizens world wide. They did it because they had killed their tax base by overtaxation and over spending. Sound familiar? yes the same Susan Rice who has gone on to stick her foot in her mouth several time since then. She never goes back to say she was wrong, so we are to conclude she thinks FATCA and FBAR are as repugnent as she called Eritrea. Every Brock member should shower every congressman in D.C. with letters, asking them to pass the FairTax HR25 which automatically kills worldwide taxation of their Expats. and makes all the agreements with the weak kneed parliments and even the dictators around the world, void as their form of governments are.
We are fast becoming a Banana Republic run by Children of the Corn.