Holding a U.S. passport used to be an asset, but has lately become a big liability.

Due to the pressure that the IRS is placing on foreign banks, many foreign banks (here in Switzerland, but also elsewhere) meanwhile decided that the trouble is too big and American business isn't worth their while any longer.

Americans living abroad who need local bank accounts to do local business, e.g. for receiving their monthly pay cheques, find that many banks simply won't let them open a bank account with them any more. Others, who have held bank accounts in the past, receive letters from their banks, telling them that they'll need to withdraw all of their money and close their accounts.

Americans are being treated as outcasts, like those suffering from leprosy in the past. No one wants to touch their assets. It's too troublesome.

From SwissInfo

Parliament split over UBS referendum

Urs Geiser
swissinfo.ch
Jun 16, 2010 - 16:14


Parliament remains divided over whether a deal between Switzerland and the United States over confidential UBS client data should be put to a nationwide vote.

The House of Representatives on Wednesday insisted on the possibility of a referendum, while the Senate again came out against.


Most members of the centre-left Social Democrats and the Greens as well as many representatives of the rightwing Swiss People’s Party continued to call for a nationwide vote.

The centre-right stood by its rejection of a referendum.

Both chambers will now try to hammer out a compromise on Thursday.

Under a deal, agreed by the government last August, Switzerland was to hand over to the US details of up to 4,450 UBS accounts of clients suspected of tax evasion. But in January a court ruled the transfer of the data to Washington was illegal.

On Tuesday, a majority of the House had followed the Senate in approving the accord conditionally.

The difference is caused by the fact that, in the Senate, in which each Canton is represented by two Senators, the center parties have the majority, whereas in the House, in which the more populous (more urban) Cantons have a larger vote, they are in the minority.

Both chambers must agree to one version of the agreement. Otherwise, the agreement fails.

The next step is that 13 Senators and 13 Representatives will form a joint committee to try to work out a recommendation to both chambers.

There is precious little time, as the spring session ends this coming Friday.

The joint committee of both chambers recommended this morning to pass the agreement without referendum. This had been expected.

The Senate already approved the recommendation by the joint committee (no surprise here).

As I write, the House is discussing the issue once more. My guess is that they also will approve the agreement. Allowing the referendum would be almost equivalent to rejecting the agreement, because

1. the referendum could not be processed before the deadline of August 20, and
2. the voters of Switzerland would reject the agreement with a large margin.

The right-wing SVP does damage control. They know that approving the agreement will hurt them at the booths next time around. Thus, they decided to abstain. This will be enough to make the agreement pass.

The left-wing SP stays "hard" and will vote against the agreement, but they can comfortably do so, because they know that their rejection won't have any effect.

Ultimately, it's all just politics. Everyone knows that it is too late to renegotiate a better deal. Hence the agreement needs to be passed ... and each party uses a different strategy for accomplishing the necessary while minimizing the political fallout in the next elections.

Which are the 4450 UBS accounts that will be disclosed to the IRS out of the 52,000 accounts held by Americans at UBS?

No one knows for sure yet, but my guess is that these are all off-shore accounts, i.e., accounts held by Americans living in the U.S., not by American expats living in Switzerland.

Also, among those off-shore accounts, only the largest will be reported. Some of those will be legitimate accounts that were fully disclosed to the IRS using tax form TD F 90-22.1. Those tax payers will be OK.

Yet I suspect that the majority of the 4450 account holders will be in trouble, and they may in fact lose as much as three times the total amount of money deposited in these accounts. In addition, the worst (largest) tax cheaters may face time in jail.

From SwissInfo

UBS deal sealed by parliament

Urs Geiser
swissinfo.ch
Jun 17, 2010 - 13:01


Parliament has endorsed a controversial deal with the United States paving the way for the transfer of confidential UBS data on bank clients suspected of tax evasion.

Justice Minister Eveline Widmer-Schlumpf welcomed the agreement, which came after several rounds of debate in both chambers of parliament during the current summer session.

The House of Representatives fell into line with the Senate on Thursday to approve the treaty, concluded by the government last August. At the same time both chambers threw out a proposal to submit the treaty to a nationwide vote.

“It is a victory for the moderate political forces and a good sign for the future,” said Widmer-Schlumpf after the vote.

She added that the result did not whitewash UBS. The bank had come under great pressure over suspected cases of tax evasion by clients in the US. The Swiss government subsequently agreed to deal to hand over details on up to 4,450 clients, despite banking secrecy safeguards.

However, the Federal Administrative Court in January ruled that the transfer of the data was illegal.


Make or break

Thursday’s final debates saw the Senate once again standing by its approval of the treaty while rejecting an optional referendum.

The other chamber, the House of Representatives, finally followed suit with 81 votes for, 63 against and 47 abstentions.

On behalf of the centre-left Social Democratic Party, Susanne Leutenegger Oberholzer called for a referendum in a bid to rein in the banking sector.

She accused the other political parties in parliament of acting as “an extension of Zurich’s banks”.

The speaker of the rightwing Swiss People’s Party, Caspar Baader, once again lashed out at the government and described the deal as “illegal”.

However, he said the party would no longer insist on a referendum, since a proposal by the centre-left to impose a new tax on bonus payments for bankers was off the table.

During her closing statement in the House, Justice Minister Widmer-Schlumpf warned that rejection of the treaty was likely to trigger fiscal and administrative retaliation measures by Washington.

“I call on you to approve the bill in the interest of the country and of its economy,” she said.

She added that the Swiss administration would now process the remaining cases to hand over the 4,450 dossiers by the end of August as agreed under the deal with Washington.


“Reason prevailed”

The Swiss Business Federation (economiesuisse) praised parliament for its decision. It said unconditional ratification of the treaty would allow both states to solve existing legal issues within the agreed timeframe.

The Swiss Bankers Association declined to comment on the outcome of the vote. It had previously cautioned against rejection of the treaty. “A negative outcome would give rise to great uncertainties and endanger Switzerland’s standing as an economic and financial centre,” a statement said earlier.

In a similar vein the centre-right Radical Party, which traditionally represents the interests of the business community, said that reason finally prevailed in parliament after “weeks of tiring wrangling, blackmailing and political U-turns”.

For their part the centre-left Social Democrats said it was alarming that voters were denied a say on the issue.

“It is absurd that UBS once again reaps the benefits and that parliament failed to take action against excessive bankers bonus payments and the risks of big banks for the country’s economy,” a party spokesman told swissinfo.ch.


Further demands

Christoph Lechner, professor for strategic management at St Gallen University, says Thursday’s vote puts an end to the UBS case with the US authorities.

However he cautions that it could pave the way for further requests for legal assistance in the case of other Swiss banks and demands from other countries, notably from Germany.

“It is absolutely crucial that the new double taxation agreement with the US comes into force quickly to block more claims,” he told swissinfo.ch.

Lechner acknowledges that the decision approved by parliament was necessary from a political point of view. But he remains skeptical whether – from a strictly legal position - it was fair to agree to hand over confidential bank customer data.

Now that the deal with the U.S. has been sealed, the Swiss Franc increased its value by another 2%.

From SwissInfo

[Swiss] Federal Court backs UBS data handover

swissinfo.ch and agencies
Jul 19, 2010 - 19:30


Switzerland must continue to hand over data from clients at the bank UBS to the United States tax authorities, according to a court ruling published on Monday.

The Federal Administrative Court ruling rejected an appeal by a UBS client opposing the transfer of data.

The court found that an accord between the two countries that had been approved by parliament on June 17 should be enforced by Switzerland. The treaty signed by the countries last year sets out the handover of 4,450 UBS client data as part a tax probe.

The court further said that the treaty should be enforced even if it breached the Swiss constitution, national laws and the European Convention of Human Rights. The court said Swiss economic interests and ability to respect commitments following international law would be in jeopardy if the treaty was not fulfilled.

The court also noted that the fact that the law was retroactive was compatible with international law.

In a January ruling on the issue the court had found the accord was not valid.

According to the treaty, Switzerland has until August 26 to provide US tax authorities with the data of clients who are suspected of having committed tax fraud in the US between 2001 and 2008.

Data for 2,450 clients has already been handed over. Of the remaining 2,000, 900 cases are being processed and others have just to be transferred.

Originally Posted by Francois Cellier

The court further said that the treaty should be enforced even if it breached the Swiss constitution, national laws and the European Convention of Human Rights. The court said Swiss economic interests and ability to respect commitments following international law would be in jeopardy if the treaty was not fulfilled.

Economic interests are more important than the law. Good to know that.