US Person status (debate)

I didn’t want to spam the existing topic, but I am surprised, ashamed and terrified that the US has so much influence, that it can basically dictate to every country that they need to have a special procedure when opening bank accounts.

99% of the population need to fil this non US form declarations when opening bank accounts, because of a couple of Americans around the world.

This is heavily imperialistic behavior imho and shouldn’t be tolerated from us Europeans. We should make moves against this imho.

Your thoughts?

1 Like

Ah yes, poor Europeans. Colonialism is perfectly fine, but we draw a hard line at imperialism. It’s not fair if we get the short end of the stick! :laughing:

In all seriousness: There are only two countries with citizenship based taxation, and Switzerland has a double tax treaty with one of them, the US. It’s no imperialistic US pressure, it simply that we mutually agreed to a certain taxation of US citizens (or residents and persons) and therefore of course must ask about ones US status.

If you disagree and really, really hate that special question you face once or twice a year, feel free to start an initiative to terminate the Swiss-US double tax treaty. After all you are living in the only place on earth where you have the direct power to do something about it.

1 Like

Yes, I agree with that it’s imperialistic. In theory, I think we should provide a tax shelter and protection from the IRS in our bank accounts for US citizens so the IRS does not have access to money held on foreign bank accounts by US citizens that live outside the US, because I think it’s unlawful for a country to impose extraterritorial law worldwide on its citizens. If you leave a country, you’re not bound anymore to the jurisdiction of that country.

But we were basically forced to give in and there is not much you can do about it. If a bank refuses to comply they will just face charges in the US, which usually leads to bankruptcy and employees find themselves on a wanted list with the danger of getting arrested when travelling even outside the US and then being deported to the US. Also a country we were threatened to lose access to the US dollar, the US stock exchanges, and the US market in general. Also sanctions would be possible. If the US would cut ties with Europe entirely, it might be a matter of time until China and/or Russia will knock on the door.

So basically, we don’t have a choice other than pledging allegiance to the imperium.

I think that’s quite a naive point of view. There was nothing mutually agreed in regards to US person / FATCA etc. they just unilaterally imposed extraterritorial law upon every country worldwide and threatened everyone to sue them in front of US courts and as such bankrupt lots of companies as a consequences. They also threatened everyone that everyone who does not comply will not only face bankruptcy of their banks, and expulsion from the US market, but also being sanctioned and losing access to the US dollar. Given that the US dollar is one of the main trading currencies worldwide this would have had severe consequences. So the “mutually agreed” part is complete nonsense, we were basically blackmailed into giving in, and we did give it because the consequences of not doing so would have been severe.

There are banks who tried it, e.g. Wegelin & Co - they do not exist anymore today.

The Swiss US double tax treaty has nothing to do with all that. The US person status / FATCA etc. discussion was entirely separate from any tax treaties. The tax treaty existed long before the US person / FATCA etc. discussion. And terminating the double tax treaty would change absolutely nothing regarding any FATCA formalities one has to file when opening a bank account.

1 Like

One has to do nothing with the other… Why is it the responsibility of Switzerland or any other country of the world to force every citizen to fill out forms that he isn’t American?

This makes the life of 99% of the population of those countries much more complicated, while only the US benefits from that. It just doesn’t make any sense. And the whole colonialism thing is irrelevant I am talking about what’s going on right now, not what Europeans or Americans did 200 years ago.

I don’t agree on this part. While the military of Europe isn’t as big as the US one, there is no way that China, let alone Russia could realistically invade us successfully.

While I agree that the whole situation about US “persons” been taxed abroad is nonsense, this statement is hugely exaggerated.

2 Likes

I don’t think so. Do you think when Germany or Switzerland would try to do this to the US that they would accept? I don’t think so.

It’s a bit more far reaching than just people having to fill out a form. It’s a matter of principle. Just imagine that every country in the world tries to impose extraterritorial law on everyone, then we would have to fill out 200 forms every time we open a bank account?

And also, the whole US person topic lead to the unjustified abolishment of the Swiss bank secrecy law, which was and is detrimental for our banking industry. The money is now just held in other tax havens some of them even being US ones. The US does not have a right to collect taxes from their citizens living abroad in another country and it does not have a right to unilaterally impose compliance and reporting requirements on every country in the world. Furthermore, we are also not obliged to help the US to enforce their ridiculous tax laws in our territory. In our territory, the only obligation we have is our own law.

It’s like if Saudia Arabia would come to the world and say, look guys, in our country we have the Sharia law and our women need to wear a Burka. We now demand this law to have extraterritorial effect what means all you countries in the world have to make sure that if a Saudia Arabia person visits your countries, for business, for leisure, for whatever, you have to make sure that they wear a Burka at all times. Every hotel, every business, shop, whatever that provides services to a Saudi person has to enforce this law, otherwise we will fine you with multi-billion dollar fines and impose sanctions on you. We don’t give a damn about Saudi law, why should we care about US law?

Then, it’s also not only about the 99% of the population, it also has a negative impact on US citizens or US person for which it is now very difficult to open a bank account in Switzerland. Most institutions won’t even open an account anymore for you if you’re a US person, so you’re restricted to a few banks that are an exception.

So it’s not only about the form, this form of imperialism had far reaching consequences on our economy, our companies and their business models. Their interference had a huge impact on our own legal system and if any other country would even try to do something similar with the US, well the outcome would probably be not very well. And it also has far reaching political / geopolitical consequences as we gave in as a (allegedly) sovereign state to the blackmailing of another country. It makes us a vassal.

We have to pledge allegiance to the imperium or we face fatal consequences. The impact is way more extrem than just filling out a form.

1 Like

No, they would get a middle finger.

Nobody would care.

They can enforce it, so they did.

They can’t enforce it, so they also would get a middle finger.

2 Likes

Yes, that’s right.

But that shows the extent and level of US imperialism. Just because you “can do” something, doesn’t give you the legal basis or legitimation for it.

That’s why I say the form itself is not the big deal, the big deal is that an imperialistic country can force other countries to do what they want without legal or even moral legitimation. They can even force other sovereign states to change their laws so they correspond with the wishes of the imperium. That’s the big deal. And then I don’t get how someone in all earnest can pull up the “mutually agreed” story, because none of all that was mutually agreed, it was just unilaterally imposed upon everyone.

1 Like

Yes and this is the problem. Why are we accepting this without any benefit for us? and as @Patron said… This doesn’t justify anything. We can do a lot of things, especially to poorer countries, but we don’t

Oh! How moral is bank secrecy?

Yes it is a problem, but not a crucial one. “We all living in America”.

Who are “we” and who are “us”?

Correct me if I am wrong, but from my understanding FATCA doesn’t concern countries, but financial institutions. It is up to financial institutions to decide if they want to comply with FATCA.

UBS agreed to provide information about bank accounts of US citizens, as they calculated that it will be more advantageous to break the law of Switzerland than to anger US.

1 Like

One of the most moral things that exist.

Whereas on the other hand, expropriation of property (including money) is one of the most immoral things that exist. Unfortunately it becomes more and more fashionable and the case of the United States is just one good example to illustrate how regimes try to expropriate / seize property of their citizens even on foreign territory. In the case of the US, this is not only morally illegitimate but also from a legal perspective.

It is an illegitimate act of protectionism and rather than stigmatising people who seek shelter from such intrusive methods and those countries and businesses that provide shelter and protection, those regimes should rather focus on providing better conditions to their citizens and residents such as lower taxes and a more fair tax system that doesn’t try to redistribute everything, so they won’t have to protect their property from them.

As such the bank secrecy law is or was a fundamental instrument in protecting property from intrusive governments. It’s nobody’s business where someone has a bank account and how much money they have on it.

Swiss banks avoid accepting US persons because administrating the accounts of US persons is very costly due to the bilateral information exchange treaty. In the case of retail banks with fixed pricing, accepting US persons results in costs which have to be carried by all customers collectively because the fees paid by the customer are not nearly sufficient to cover them. This is the case with PostFinance, which is legally required to open accounts for all residents of Switzerland.

So the alternative to rejecting US persons would be to have special versions of each product just for US persons, with special pricing. Many private banks offer these kinds of solutions because their products and fees are individually tailored to customers. For retail banks, the demand simply is not high enough to justify developing special product lines. So until there is a huge spike in demand for Swiss bank accounts by US customers who are willing to pay substantial fees, simply rejecting US persons remains the most practical option. The declarations included in account applications and clauses in contracts are the simplest way of doing this.

It is also worth noting that US persons are currently the only individuals who do not benefit from Swiss bank customer privacy laws even as residents of Switzerland. Swiss banks are required to share their account information with the US government.

So the only real inconveniences affect US persons themselves. I presume that US voters can influence their government with regards to these kinds of laws/agreements. So it can be assumed that if US laws governing taxation remain in place, it is with at least the passive consent of US voters.

4 Likes

Yeah the “consent of the voters” aka. If you expatriate we won’t give you visa for a decade or so… mhm…

Incase you are a US person and have to pay US tax, I advise you to NOT open a pillar3 account. The tax treatment is very complex for a ‘Passive Foreign Investment Company’ most people need to hire a very expensive tax accountant to report correctly. Some explanation here Do you Have a Foreign Pension? It May be Invested in PFICs - Swiss American Wealth Advisors

If you are not a US tax payer, then nevermind the above and congrats :tada:

Or open a 3rd pillars with Viac. A friend of mine did it as US person and no problem was raised.

1 Like

The problems are coming from US IRS side, not from a Swiss 3a Foundation.

2 Likes

OK I believe my friend did not submit his 3rd pillar in his US tax declaration.

1 Like

Sounds risky, I don’t know what the state of data sharing to IRS is in that area, but even if it’s not yet shared, wouldn’t be surprised if it eventually is (and then you get a lot of fun dealing with that :slight_smile: )

1 Like