FATCA and Switzerland

205 thoughts on “FATCA and Switzerland”

1. An article in another Swiss regional newspaper explains Strassen’s citizenship situation more clearly. To summarize, he was born a German citizen (and US citizen) in the US, emigrated at an early age, presumably with his German parents, to Switzerland and became a naturalized Swiss citizen at 20:

   American by birth

   Strassen was born in 1963 as the son of German mathematicians in San Francisco. According to the US Constitution, anyone born on American soil is automatically a citizen of the United States, including streets. But he grew up after his birth in Switzerland. “I naturalized right after reaching majority age, and I got my Swiss passport at 20,” Strassen recalls. “To this end, I had to write a statement to the US embassy to renounce my US citizenship.”

   However, when Strassen wanted to travel to the States a little later, he learned that his American passport was still valid, because his renunciation was not legally binding: he was not 21 years old at the time of his signature.

   Strassen wondered at this circumstance, but paid no attention to him. He studied mathematics at the ETH (Swiss Federal Technical University) and did his doctor’s degree. In his everyday life, his unsettled status as a US citizen did not matter for the next 30 years.

   This changed when bank secrecy in Switzerland finally fell. Strassen contacted the Swiss Federal Department of Foreign Affairs (EDA) and inquired what this might mean to him. There he was told that his situation was delicate. If it were true that the United States still regarded him as a citizen, he would have committed a criminal offense. “Worse still, I’ve worked as a cryptologist for the Swiss Army for three years,” says Strassen. As a citizen of the United States to work for a foreign army, that would be high treason.

   Bank closes account

   There were not consequences from that that yet, the current troubles did not begin until April 2015 with a very joyful event: Strassen and Laxdal married. In doing so, they terminated their previous banking relationships instead opened a joint private account and a business account at PostFinance.

   In January 2016, Strassen received a difficult letter from PostFinance. He was asked to reveal his potential status as a US citizen and to submit evidence from US authorities. Strassen did not comply. “I explained that as a Swiss citizen living permanently in Switzerland, I did not intend to clarify my status and was not willing to make statements to PostFinance for foreign authorities.” Strassen is also concerned about the principle that he is Swiss, never lived in the States, had his entire education in Switzerland and therefore would therefore pay his taxes here.

   Following Strassen’s response, PostFinance struck back: PostFinance persisted and blocked the couple’s access to online banking at the end of March. The bank cards were drawn into the ATM, the credit cards were blocked and the account closed.

   To a concrete case PostFinance can not specifically express itself, says Johannes Möri of the PostFinance. In general, however, the bank was required by the FATCA (Foreign Account Tax Compliance Act) agreement with the USA to verify whether a customer could be an American citizen and therefore liable to tax in the United States. If such an indication exists, PostFinance needs to ask for a waiver from customer of bank secrecy in order to be able to forward the relevant data to the US authorities. “If the customer refuses, the bank can not comply with the FATCA agreement. This creates legal risks for us, “says Möri. In this case, the bank dissolved the relationship with the customer.

   These provisions apply to all Swiss banks, and the handling of money has therefore become very cumbersome for Strassen and his wife. Their wages for example – Strassen was until recently a lecturer at a college, Laxdal is a specialist doctor in a hospital – can no longer simply be transferred to an account, but must be paid out in cash, which can only be achieved with considerable additional effort. It has also become complicated for Strassen to pay child support for his two children in Bern. Not because the money is missing, but because the previous standing order has been suspended and he can not set up a new one. And for the work for the theater, especially the loss of access to online banking is very cumbersome: “Try to order something online if you do not have credit cards,” says Strassen.

   After all, the business account for the theater has not yet been blocked. But it can not be used, either, for fear that it could be blocked as well. “We have now deposited the money for the theater in another location,” explains Strassen.

   http://www.zuonline.ch/front/eine-hochzeit-und-die-ussteuerbehoerde-zwingen-das-laxdaltheater-in-die-knie/story/14389694#mostPopularComment

2. @Innocente
   What a travesty, that a bank can hold a reputable citizen hostage like that.
   Surely if he worked as a cryptologist for the Swiss army it would qualify him for a past relinquishment rather than treason. I do not speak German, therefore cannot leave a suggestion/comment.
   I think in this climate it is never wise to close any bank account that is functioning and not asking questions, it seems any new account opened now wants nothing less than a blood sample.

3. What a sad state of affairs. If he had only stumbled across IBS years ago……

   From what folks here have explained about place of origin in a Swiss Passport, he could have stayed under the radar. But he did not know any better because when you hear about this you think its Rod Serlings TV show…The Twilight Zone.

   His response that he was Swiss, living in Switzerland, educated in Switzerland and a Swiss taxpayer meant he was not a tax cheat.

4. Criminal offence! High treason! (Not ordinary treason, high treason!). All B.S. His work for the Swiss army wasn’t treason , it was a relinquishing act. Too bad we can’t get this to him.

5. As per their names shown in the Zürcher Unterländer article, I would be 99.9% certain that the following contact info found in the Swiss local.ch online phone book (openly accessible) belongs to them:

   Dr. Strassen Tyko
   Frohburgweg 3
   8180 Bülach
   Phone * 081 756 56 57 Mobile * 079 478 17 70 Phone * 0800 STRASSEN Email * tyko@strassen.ch

   Laxdal Katerina
   MUDr. (CZ)
   Frohburgweg 3
   8180 Bülach
   Mobile * 079 601 92 63 Phone * 081 756 56 75 Email * katerina@laxdal.doctor

   Having read the article in the original German version, it sounds to me that this is a clear case of “Accidental American” and that Strassen should claim a pre-2004 relinquishment. He could simply try to open another account elsewhere and invoke the “reasonable explanation” clause of the Inter-Governmental Agreement to justify why he is not an US Person. No Certificate of Loss of Nationality neccesary.

   Would someone here who is already out in the open please write to them and give them some IBS-style advice? I would certainly hate for them to enter an OVDP or otherwise get cheated by compliance-condor accountants/lawyers.

6. @JDT
   I don’t speak German, (I am French Swiss) so did not read the original article, but from what Innocente posted it sounds like Strassen was coerced into using his US passport after he had become Swiss at the age of 18 and hence a backdated relinquishment was refused. As he has worked as a cryptologist for the Swiss military then he may be able to claim a relinquishment from that era. Perhaps someone can put him in touch with IBS so we could establish the facts before anyone could advise?

7. @Jefferson D Tomas, done.

8. @JDT & Medea.
   Ditto

9. Also, I would certainly hope that they were able to get the funds out of their personal PostFinance account: THEY MOST CERTAINLY HAD THE RIGHT TO THE RESTITUTION OF THE FUNDS that were in the closed account:

   Unless there was a sequestration (a freeze ordered through the courts), the bank must reimburse the funds to the holder, even in the case of the bank unilaterally freezing and subsequently closing the account due to a suspicion of noncompliance (which would appear to be the case in the Strassen/Laxdal affair). There is jurisprudence in Switzerland to the effect that if the bank refuses restitution of the funds and the account holder subsequently pursues a collection action against the bank, that the judge must allow the collection action to proceed and the bank must pay up.

   Here are some articles related to the recent court decisions requiring the banks to pay up in the case of a unilateral freezing of an account:

   http://www.brhpartners.ch/avoirs-defiscalises/

   https://www.letemps.ch/economie/2016/02/25/justice-genevoise-oblige-bnp-paribas-debloquer-compte-un-client-francais-non

   Sombody please pass this info on to Strassen/Laxdal. Sorry, I did not have any time to search for German-language reference to the various cases.

10. US tax attorneys and practitioners are expensive in Switzerland. Several years ago swissinfo.ch reported that US tax attorneys in the country were routinely charging CHF 1’000 per hour (US$ 1,000) for tax advice to individuals. In addition to supply and demand, a possible driver for the high rates is expensive professional liability insurance. As an example, Zurich Insurance asks specific questions regarding an attorney’s exposure to US clients on its application form for professional liability Insurance:

    3. Business relations with US clients
    – Are business relationships conducted with US citizens (individuals) or US companies
    (Including subsidiaries of companies based in the USA)? Yes No
    If so:
    – Are services offered in the area of taxation of US-taxable natural persons as well as US-taxable companies? Yes No
    – Are US tax returns prepared for US-taxable natural persons as well as US-taxable companies? Yes No
    – Is more than 50% of the total turnover generated with clients from the US? Yes No

    The application form is at this link under “Zusatzblatt zur Offertanforderung Zurich Berufshaftpflichtversicherung für Anwälte und Notare”:
    https://www.zurich.ch/de/firmenkunden/sach-und-haftpflichtversicherung/berufshaftpflicht/anwaelte-und-berater#/professional-liability-insurance-for-lawyers

11. @Innocent

    I wonder of having more than 50% US customers would result in an “application denied” response.

12. I came across this article from the Federation of Consumers in west Switzerland:
    http://www.frc.ch/articles/ouvrir-son-compte-comme-un-grand/

    The article dates from 2015 (so post FATCA implementation) and may be of some use to those whose minor children want to open small accounts in CH: it seems that the parents do not always have to sign any documents. This may be useful where the child has no obvious US indicia, e.g. presents with a CH ID card and Swiss mailing address. Per the article, banks enable the child to give power of attorney (signature authority =procuration =vollmacht) to their parents, but this is not always required, meaning that if the child’s parent has some US indicia they can stay off of the account completely and let the youngster learn to manage their allowance money as they see fit.

    Use the information at face-value and as you see fit… I am not your/a lawyer etc.

13. Here is an article about the BCV (Vaud state bank =Waadtland for those in the german-speaking part of CH) category 2 “Program for Swiss Banks” participation with the IRS. http://www.hebdo.ch/hebdo/cadrages/detail/banques-le-prix-du-pass%C3%A9

    What is telling is that this is a “local” bank, a “regie” of the cantonal government as I would see it, and that they did not actively seek US “homelanders” as clients. Why they did not invoke cantonal sovereignty (which is guaranteed in the CH constitution) is beyond my comprehension from a purely juridical standpoint, though it seems that they had the proverbial gun to their head.

    I read another article on the BCV some time back which stated that it was in some sort of deferred prosecution agreement with the IRS or Treasury until four years from ~December 2015. I cannot find this article again. Does anybody have any further information on the BCV’s “Program for Swiss Banks” participation and deferred prosecution agreement status?

    It would be interesting to see what actually is in the deferred prosecution agreement. As they are a cantonal bank, perhaps it might be possible to force them to disclose the text.

14. The US Treasury listed its scam documents here: https://www.justice.gov/tax/swiss-bank-program

15. I would like to take this opportunity, on the eve of important Congressional hearings on FATCA and CBT, to encourage everyone in CH to contribute even small amounts to our lobbyists in DC:

    https://www.gofundme.com/American-Overseas-Advocate (Keith Redmond)

    http://repealfatca.com/ (Jim Jatras).

    Please post if you know of others….

    No matter how fatalist some of us may have become, we’ve got to fight on.

    EVEN SMALL DONATIONS COUNT !

    The Republican party has stated that repeal of CBT and FATCA are parts of their platform.

    Let us hold them to their word— through lobbyists that are there to speak for us– and to remind those in DC what they have promised.

    Keith Redmond has been active in France and online for the resolution of our issues in speaking to those affected as well as to French and European politicians in order to inform them about what matters to us. He is an active member on many FB groups related to our issues.

    Jim Jatras has been present since the FATCA Forum (https://www.youtube.com/user/FATCAForum). He has created and authored the
    http://repealfatca.com/ website since shortly after the FATCA Forum adjourned.

    Both of these folks are ready and able to lobby Congress in DC. I am confident that they truly believe in our Cause. They have both contributed umpteen hours to our Cause and need our help to bankroll their expenses at this critical juncture. Please chip in! Even if it is a small amount !

    I am counting on you!

    We might regret it if we do not chip in our dues NOW !!!

    in the name of FREEDOM !

16. Jim Jatras on how FATCA Can Be Defeated: https://www.youtube.com/watch?v=ehOrZSPS-14

    (Ante-facto)

17. I just came across another link referring to “Freezing [unilateral] of Secret Accounts by Swiss Banks is illegal”. (see Straussen and other cases that we might know about where accounts are frozen pending proof of compliance).

    Does anyone know this guy Enzo Caputo? http://www.swiss-banking-lawyers.com/frozen-account/freezing-of-secret-accounts-by-swiss-banks-is-illegal/

    This is not an advertisement for his services, and I have the impression from his website that he mostly deals with wealthy customers. Maybe I am wrong, but I wonder if he has handled any cases of USPs or suspected USPs resident in Switzerland who have had accounts frozen? Should we write him and ask him?

    To recap, here are some other links about recovering money from accounts that are frozen unilateraly by banks (I posted these in earlier comments to this thread):
    http://www.brhpartners.ch/avoirs-defiscalises/
    https://www.letemps.ch/economie/2016/02/25/justice-genevoise-oblige-bnp-paribas-debloquer-compte-un-client-francais-non

18. Looks like it would be mostly wealthy clients is my guess.

    http://www.swiss-banking-lawyers.com/

    Says he’s an ex-UBS lawyer. Question may be why is he an ex?

19. A motion has been raised by the external politics committee of the National Council in order that PostFinance provide basic financial services to Swiss abroad.

    https://www.letemps.ch/economie/2017/07/04/une-motion-veut-ouvrir-aux-suisses-letranger-lacces-postfinance

20. Guess it depends on what they mean by access. As far as I know both Swiss nationals and others can still keep their PostFinance account when they move abroad. There are monthly account charges to be paid and whether you can use things like e-banking easily I don’t know. If you’re American or move to America it may be more difficult.

21. Posting also here, original mention courtesy of @innocente on another IBS thread;
    https://www.swissinfo.ch/eng/witness-accounts_swiss-expats-feel–messed-around–by-swiss-banks/43404584
    ‘Swiss expats feel ‘messed around’ by banks’
    By Matthias von Wartburg

    ‘Accounts are either closed or suddenly subjected to an additional bank charge of almost CHF500 ($518) a year. For Swiss living abroad, it is becoming increasingly difficult to keep an account at home.’

    and,
    ‘Swiss expats in fighting spirit over banking service’
    By Urs Geiser
    https://www.swissinfo.ch/eng/talking-business_swiss-expats-in-fighting-spirit-over-banking-service/43358992

    “…All the institutions surveyed reported that expatriate Swiss can “in principle” open an account with them. Swiss expatriates living in the United States or in one of the so-called embargo countries are generally excluded.

    Customers must prove that tax has been paid on the money on the account. The ZKB also requires a minimum deposit of CHF100,000 as a condition for opening an account.

    In answer to the question of how the fees are justified, they all gave the same reason: enormous additional expenditure.

    Bank Cler (formerly Bank Coop) summarised it as follows: “Fulfilling legal and regulatory demands is causing considerable additional expenditure. In order to compensate for this additional expenditure (particularly in customer support and monitoring), we introduced a fee for customers domiciled abroad.”…..”……..

22. Have you heard about the man living in Switzerland with his Swiss wife who jumped into the flames at the Burning Man festival?

    I wonder if this is a FATCAcide:

    https://www.theguardian.com/culture/2017/sep/03/man-dies-after-running-into-fire-ceremony-at-burning-man

23. Recently released Swiss statistics show the number of ordinary American citizens in Switzerland (CH) fell further in 2016 while the number of US diplomats and functionaries stablized. An update from a previous post follows with 2016 figures:

    2016:
    Americans permanently resident in CH: 16,689
    US diplomats, functionaries, Ci status: 2,264
    2015:
    Americans permanently resident in CH: 16,993
    US diplomats, functionaries, Ci status: 2,263
    2014:
    Americans permanently resident in CH: 17,481
    US diplomats, functionaries, Ci status: 2,192
    2013:
    Americans permanently resident in CH: 17,724
    US diplomats, functionaries, Ci status: 2,059
    2012:
    Americans permanently resident in CH: 17,800
    US diplomats, functionaries, Ci status: 2,114

    The US State Department maintains four facilities in this country, which is the size of Connecticut. An embassy in Bern, a consulate in Geneva, a mission in Geneva (with a separate US ambassador) and a consular agency in Zurich. The Trump administration plans to reduce the State Department budget by 29%. A good place to start the budget slashing would be in Switzerland.

    https://www.pxweb.bfs.admin.ch/Selection.aspx?px_language=en&px_db=px-x-0103010000_101&px_tableid=px-x-0103010000_101\px-x-0103010000_101.px&px_type=PX

24. In a twitter discussion group: a person living in Switzerland says that certain equity shares had to be “donated” to a bank because of FATCA, because the bank did not want to deal with him and did not want to help him move the shares to another financial institution. !!

25. “We are making another run at forming a Switzerland group and there are some people that have expressed an interest and we have at least one person willing to lead it. Daniel Küttel-Balanon informed me that an effort was made before to get something started in Switzerland and the interest was low. I think the universal feeling, so far, is that this group would be focused on actions and model its self more after Fabien Lehagre’s group. This will involve people’s time. We are also looking for a “PR person” to advise the group’s messaging and (attempts for) press communication. Anyone with legal background (Swiss and/or US) to be an adviser. Other talents and connections (marketing, tax, academic, local politicians) are also welcome and needed. We will plan a meeting somewhere in the coming weeks. We already have several people that have shown an interest. If the interest is too low, we will drop it. Please let me know if you are interested. Thanks.”

    https://www.facebook.com/groups/purpleexpat/permalink/1705826382866799/