Switzerland has agreed to comply with U.S. disclosure rules on offshore accounts controlled by Americans set for 2014, Swiss president Eveline Widmer-Schlumpf said on Tuesday.
"We have initialled the agreement," Widmer-Schlumpf said in parliament in response to questions from lawmakers, without providing further details.The agreement, which will come up for final government approval in January, would reconcile Swiss secrecy rules with U.S. disclosure demands under the Foreign Account Tax Compliance Act (FATCA) enacted in 2010.
The act requires foreign financial institutions to tell the U.S. Internal Revenue Service about Americans' offshore accounts worth more than $50,000.
Widmer-Schlumpf denied a link between initial agreement on FATCA and separate, ongoing discussions aimed at ending U.S. probes into 11 banks suspected of helping clients dodge U.S. taxes with offshore bank accounts.
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Source:
Reuters
"The pact, which was agreed upon in Washington and must still be officially signed, approved by parliament and allowed to proceed by the Swiss people, aims to simplify the implementation of the Foreign Account Tax Compliance Act (Fatca), according to a statement by the State Secretariat for International Financial Matters (SIF)."
ReplyDelete"The text of the agreement will be made public once the treaty is officially signed."
http://www.swissinfo.ch/eng/i.html?cid=34109100&sb=twi
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!
Posted by Marvin Van Horn
The "Swiss financial industry" can't be lumped together so easily. Trading arms of investment banks and the insurance and reinsurance firms are largely untouched by FATCA. Few retail or private banks are now willing to maintain nonbusiness accounts for US residents, even for Swiss citizens in USA: http://www.swissinfo.ch/fre/economie/Colere_des_Suisses-Americains_contre_les_banques.html?cid=30562536 (in French). I'm not sure that FATCA will make much difference there.
ReplyDeleteTalk in Switzerland shows more concern with taxation of income and gains as the UK raised its marginal rate to 50% (since lowered to 45%); the rate in Geneva is only slightly less: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awNIE35abSFY Both would like to attract hedge funds from London. (Whether either country can compete with the US tax treatment of "carried interest" is doubtful but they have other advantages.)
Foreign countries will have to address the status (under FATCA etc) of those who dispute US-person status. US nationality law allows for doubtful cases, and there is arguably an international-law right to abandon one nationality for another. To make renunciation contingent on paying back taxes or a tax penalty - in the case, say, of someone who is insolvent or otherwise unable or unwilling to pay and has no other asset, family, income or domicile connection with the USA is problematic. Congress has enacted present law in part out of spite and in part out of ignorance or insouciance over the effect of huge potential penalties (for non-declaration of accounts, assets, signatory power, corporations, trusts, etc. abroad)
on middle-class persons that most could never pay. But there are no votes in rectifying the situation; Americans abroad are nobody's constituency unless they work for multinational firms. In that case their employers pay for expensive tax return preparation.
I keep looking for a specimen case where someone deported from the USA as an illegal immigrant is pursued for taxes by the IRS as a long-term resident for "expatriation to avoid tax". It would make a nice footnote to a law review article.
UBS, Credit Suisse and some other banks (especially private ones whose managers in past years told me with some arrogance that as they had no US offices they were immune to IRS and Treasury pursuit) have shown a criminality beyond belief in soliciting tax evasion on US soil. But they've shown this before: in the theft of Holocaust bank assets and insurance policies. (Switzerland, like many or most countries, has no US-style escheat law: the bank gets to keep unclaimed funds.)
And Cristoph Meili (the UBS night watchman who reported the shredding of Holocaust-era records) was not the first whistleblower although he may have been the first to do so without wish for gain. Now and 70 years ago there was leakage of depositor information to various tax and customs authorities in expectation of reward. It's just easier now, downloading bulk data (as Bradley Manning did of intelligence secrets) onto a thumb drive.
Bank mergers have left Switzerland with two large banks (UBS, Credit Suisse), a network of cantonal banks, a couple of cooperative banks (including Raiffeisen) and a few Swiss and a number of foreign private banks. And the Swiss Postbank, a government entity. There may still be room for criminality among a few foreign private banks of the BCCI-sort (actually I seem to recall BCCI's Swiss subsidiary was not insolvent and was sold; but it is said to have been used for money-laundering on a large scale). But the rest have largely abandoned US persons as customers.
But this is not unique to Switzerland: it's true all over Western Europe. Electronic banking (IBAN numbers) and credit and debit cards may make it irrelevant: it's now easy to make cross-border payments. And extreme data collection makes it harder to hide untaxed profits and gains anywhere; low or zero interest makes it unprofitable to do so.
Posted by Andrew Grossman