
Switzerland in the age of automatic exchange of banking information - baazaar
https://www.swissinfo.ch/eng/financial-transparency_switzerland-in-the-age-of-automatic-exchange-of-banking-information/45234706
======
dbrgn
To me as a Swiss citizen, born in Switzerland, living in Switzerland, it's an
impertinence that every time I open a bank account with a Swiss bank I have to
fill out at least 1 form with information about my relation to the US, about
my travels in the US and whether I _might_ have to pay taxes there.

As a side note, the only other country besides the US that collects taxes
based on citizenship and not based on residence is Eritrea. The tax policy of
Eritrea is described as extortion by a lot of western governments and media.

~~~
nradov
Swiss banks are in that position today because some of them engaged in
criminal conspiracies to help US customers commit tax fraud. If they want to
participate in the US financial system then they have to play by US rules.

US citizens residing in other countries can still receive some services and
protection from the US federal government. So it's completely fair to tax them
for that. We can argue about the value of those services but clearly it's >0\.
Those who don't like the deal are free to pay an administrative fee and
renounce their citizenship.

~~~
Erlich_Bachman
Every single bank in every country that wishes to use USD is in that position
today, it is not related to whether they were shown to help in some criminal
activity.

> US citizens residing in other countries can still receive some services and
> protection from the US federal government.

Seriously, like what? In how many percent of situations does this ever come
up. Sure it's more than >0, but if it is like 1$/person does it really make
sense? This is economic bullying by a country that right now happens to be in
a position (having strong military, influence and their currency being the
reserve one) to be able to get away with it.

~~~
colechristensen
For starters the first $103,900 is tax free if you qualify and are living
abroad.

What it comes down to is that because of its size and economic power there is
an enormous incentive for wealthy people who earn their income (in an actual
sense, not a tax law menagerie sense) in the US to try to avoid US taxes by
living abroad and moving assets, their "home", etc outside of US jurisdiction
while still in reality earning their income from the US.

One of the basic benefits is always being able to return to the US. Being
inside American borders is very much safer than being anywhere else if/when
the next major global military issue arises.

You also get the benefits of the US legal system if you maintain ties,
investments, etc.

If you don't want to pay those taxes you are welcome to renounce your
citizenship, but you have to get another country to accept you first. (they
won't revoke your citizenship if the result is your being stateless)

~~~
Scoundreller
> One of the basic benefits is always being able to return to the US. Being
> inside American borders is very much safer than being anywhere else if/when
> the next major global military issue arises.

It’s a funny fear, because today, being in the US vs. some other developed
country takes about 7-8 years off your life.

Meanwhile, those developed countries with functioning health care systems that
you can return to whenever don’t bother with worldwide taxation.

~~~
colechristensen
>It’s a funny fear, because today, being in the US vs. some other developed
country takes about 7-8 years off your life.

Does it actually?

I assume that disparity is more to do with the populations of impoverished
people around this very diverse country that can't compare to smaller European
countries that just don't have those populations.

There is no Mississippi in Germany, those populations are in other countries.

If you compare the whole European Union to the US the disparity is much
smaller.

>It’s a funny fear, because today, being in the US vs. some other developed
country takes about 7-8 years off your life.

I think that is an exaggeration, I can't find that statistic anywhere.

But you have to look at people in your demographic, not the entire country.

The US has the best health care in the world _if you can afford it_.

Just about anybody can get insurance and set aside the max out of pocket costs
to insure themselves and their family, but they will take a considerable hit
in quality of life, home size, luxuries, etc. In other countries that health
care is paid for with lowered salaries through taxes and quality of life takes
a hit anyway.

~~~
angry_octet
You would have to be very rich indeed to achieve the same level of cover as is
provided in comparable economies (UK/DE/AU etc), because the insurance is
expensive and out of pocket costs / copay is high, and you may discover you
cannot get or maintain insurance once you develop a chronic condition.

But even if you dealt with a broker and crafted a special insurance insurance
product to deal with the eventuality of being denied further insurance, you
are ignoring something significant: you don't improve the quality of life or
lifespan of the _population_ by making healthcare only accessible to the rich.

~~~
trevyn
The ACA has removed the pre-existing condition problem, and significantly
changed some of the pricing considerations. It’s more affordable now than many
are led to believe based on the old structure.

------
JacKTrocinskI
USA is overreaching, European countries should stand up this crap. I'm a
Polish and US Citizen and I remember a situation where I was at an airport in
Poland and was not let onto a flight after presenting a valid US passport and
Polish ID card to the Polish border patrol. They didn't allow me onto my
flight due to lack of a Polish passport (Polish law says I need a Polish
passport when travelling to the US). I called the US embassy which told me
they couldn't help me because I was Polish citizen on Polish soil. In that
case why should I pay taxes while abroad? Will the US come to my rescue if a
war broke out or major disaster occurred? They couldn't even get me onto a
flight back to the US.

I ended up getting a hotel for the night, bought a plane ticket to Germany the
next day and another one from Germany to the US. I was offered a small refund
for my round trip tickets from Poland to the US. Only person I could count on
was myself that day.

~~~
kgwgk
> USA is overreaching, European countries should stand up this crap. [Recounts
> story about issues at Polish border due to Polish law and Polish
> citizenship.]

So you would have liked the US to stand against Polish crap on your behalf?

~~~
JacKTrocinskI
I pay Polish taxes on the money I earn in Poland and I abide by Polish law
while in Poland, why should I abide by US law while in Poland? What's the
benefit to me? I mean if I'm paying an overreaching tax then yeah I kind of
expect them to overreach for me.

~~~
kgwgk
> (Polish law says I need a Polish passport when travelling to the US)

What would you have expected the US to do? Smuggle you out of the country?

~~~
JacKTrocinskI
Honestly, one call from the embassy and I would have been on that flight,
believe me.

~~~
kgwgk
As far as I understand, if you were trying to fly from the US to Poland using
a Polish passport you would have faced the same problem (or even worse, as you
wouldn’t have had a legal way to exit the US at all without a passport).

------
88840-8855
I am no expert, it would be great to read it from someone with knowledge in
this field.

What if a shell corp is created in a country that is not included in the list
of the ownership info automatic exchange? Instead of option A, someone could
go with option B and would be fully protected:

Option A: Owner in the UK -> Swiss Bank account

Option B: Owner in the UK -> Shell corp & legal entity in a country not
included in that list -> Swiss Bank account not on the name of the owner, but
held by the shell corp/legal entity

~~~
Havoc
That's where the concept of UBO comes in - the reporting party is supposed to
trace this through to the ultimate beneficial owner. And if they can't then
they're not supposed to accept the business (KYC fail).

[https://en.wikipedia.org/wiki/Beneficial_ownership](https://en.wikipedia.org/wiki/Beneficial_ownership)

A lot of the offshore locations a laymen can name report this stuff anyway (to
varying degrees of course).

The whole straight up hiding money approach(Or to put it in hn terms "security
through obscurity") isn't really a thing anymore.

~~~
Muromec
Wasn’t there an article recently describing how you can register a company in
UK through a web portal and put absolute rubbish in a UBO field without having
to submit any single piece of documentary evidence?

~~~
Havoc
No idea what UK company registration processes look like.

Possibly. You're not gonna get far moving your mountain of coin without the
help of lawyers, accountants, investment bankers, banks, prime brokers etc.

...none of whom will touch you if you can't prove this stuff reasonably well.

As for people submitting straight up fraudulent info - rules don't stop people
like that in the same way sternly telling a mugger that it's illegal won't
stop them from taking your wallet. Checks & balances sure but beyond a certain
level of illegality more rules achieve nothing.

~~~
_trampeltier
Analysis by Global Witness shows 87,000 properties – 40% of them in London –
are anonymously owned by firms registered in tax havens

[https://www.google.com/amp/s/amp.theguardian.com/uk-
news/201...](https://www.google.com/amp/s/amp.theguardian.com/uk-
news/2019/mar/17/100-billion-of-uk-propert-secretly-owned-anonymous-firms-tax-
havens)

~~~
Havoc
Would be curious what you (and the guardian) reckon "anonymous" means in this
context?

Shareholder data for private companies aren't generally publicly searchable
regardless of country...(hence the "private" part)

------
pjc50
This is not something that Switzerland was happy to do; it took a lot of
pressure to get them to stop being an asset haven for international tax
avoiders.

~~~
baazaar
To be precise: pressure from the US. Now the US is Switzerland.

~~~
csomar
Many people are missing this point. US banks, until this point, do not
exchange information on their foreign customers. FATCA is more like: Hey Hong
Kong, Swiss, London, nice business you have over there, maybe I can get in the
action too. All of the action actually.

~~~
pentae
And as a result of that the US is now the worlds largest offshore banking
center for the rest of the world. It's a pretty safe place to hold your money,
after all.

------
rolltiide
Don't worry, Switzerland is still attractive for many reasons as a stable,
competitive, well connected financial center.

I think a lot of people don't realize that bank account privacy is just 1 of
20 distinctive qualities of Swiss institutions and regulatory structure.

Switzerland is attractive because its not just shell companies and PO boxes,
compared to other nations that try to offer similar nominal regulations.
Instead it has a vibrant regulatory system with competition amongst each state
and no expensive federal government. As an example Google pays the same as it
does in Silicon Valley, with employees being only subject state level tax. The
state of Zug is a fintech hub with an income tax rate of 7%. Territorial only.
The Swiss franc is currently pegged 1:1 with USD, having ditched Euro peg
almost 5 years ago.

The regulators and public sector representatives are very accessible because
everything happens at the sparsely populated state level, and they all operate
under the swiss brand which includes access to the global financial system.

Switzerland is better thought of as a loose collection of sovereign states
with a small national government. The concept may seem familiar but recognize
how small all of Switzerland is and that has factored into why the national
government never grew arbitrarily large to maintain cohesion and assume its
own intrusive identity, and why direct representation has been possible there
for almost 200 years (they did represenative democracy before that, like the
US, but figured out how to remove it since the flaws were obvious and they're
smaller)

Outside of finance and regulatory structure, Americans may also find the
vibrant gun culture and visible military to be refreshing and familiar. A
stark contrast to the ideals and vocal opinions that neighboring Europeans
would have about guns as soon as they find out you're American, possibly
unaware of what Switzerland offers and has offered for a very long time.

~~~
dbrgn
> The Swiss franc is currently pegged 1:1 with USD, having ditched Euro peg
> almost 5 years ago.

It's not.

~~~
rolltiide
The Swiss central bank actively tries to maintain parity

Use whatever word you want to quickly convey that thought to a broad
population

“Peg” also does that.

~~~
kgwgk
Over the last four years the USD has moved in the range 0.92-1.03 CHF (a +/\-
5.6% interval around the midpoint). The average rate is 0.985, the standard
deviation 0.019 (2.0%).

Over the last four years the EUR has moved in the range 1.06-1.20 CHF (a +/\-
6.0% interval around the midpoint). The average rate is 1.117, the standard
deviation 0.034 (3.1%).

Even though the exchange with the USD is slightly more stable in this case (it
depends on the period and metric chosen) saying that it's pegged is an
exaggeration.

By the way, the CHF was not pegged to the EUR either. There was a minimum rate
set by the SNB at 1.20 but it floated as high as 1.26 in 2013.

~~~
devnulloverflow
> ... but it floated as high as 1.26 in 2013.

Just before they abandoned the peg as too hard to maintian.

~~~
kgwgk
Maintaining the 1.20 floor (not peg) is not hard when the CHF is weakening
against the EUR, the SNB doesn’t need to do anything at all when the exchange
rate is moving in the direction they want.

They abandoned the floor more that a year and a half later, in January 2015,
when the exchange rate was back at 1.20 despite their efforts to keep CHF
appreciation under control.

------
kmonsen
Swiss banks doesn't actually disclose to swiss authorities, even though the
have a wealth tax based partially on the money in your bank account.

~~~
lawl
> Swiss banks doesn't actually disclose to swiss authorities, even though the
> have a wealth tax based partially on the money in your bank account.

(i'm swiss)

I believe there is no way in hell they could have passed this legislation if
it included giving data of swiss citizens to the swiss government.

People here cherish their banking secrecy and it's still somewhat part of the
national identity.

From a swiss point of view it was/is pretty much: The US is pressuring us too
much, we'll have to give up banking secrecy, _but_ only for foreigners.

If they didn't do that, i'm fairly certain it would have been shot down by the
people with a referendum.

~~~
kmonsen
I loved in Switzerland recently, and I never really understood how the wealth
tax works when the banks don't talk to the tax authorities. Is it entirely
optional?

~~~
dbrgn
You fill out a tax declaration every year. If you don't disclose some values
and this is discovered later on, you will be punishable with a fine (between
30% and 300% of the tax on the non-disclosed values). The fine can be avoided
in some cases by self-indictment, but of course you'll still have to pay the
avoided taxes plus interest.

If you even fake documents to avoid taxes, then you can end up in jail.

This system of "voluntary" tax declarations is like a contract between the
government and the citizens: Government doesn't stick their nose into bank
accounts of citizens, while citizens pay taxes on their assets. I'm not sure
if it's a good system, but it has mostly worked out so far.

------
shadowprofile77
I have to say that I find the attitude I quoted below from the link, ever more
prevalent in today's political and social climate, to be extremely dangerous
in how one-sided it is.For one thing, competition is a cornerstone of better
development. Yes, it sometimes needs to be moderated but as a basic rule of
anything economic, it works at delivering more and better options and keeping
exploitative tendencies in check. This applies to the regulatory frameworks of
countries just as much as to any other economic actor and the just as many of
us would probably agree that it's a bad idea for every company in X industry
to collude on fixing prices, the notion of stamping out competitive tax
regimes among nation states should be looked at with the same suspicion and
for the same reasons of curtailing abuse against those who have to pay for
everything.

Secondly, at what point does it allow for the question of just how much
government should be allowed to spend? The entire onus should not simply be
placed on crushing tax avoidance, and a serious debate about the size, scope
and sheer spending done by governments today needs to balance things out. This
isn't an argument against social programs or helping the poor it's just a
recognition of the basic fact that a tremendous amount of money extracted by
states gets wasted on all sorts of immense bloat. We complain about
bureaucratic mismanagement by various countries all the time but for some
reason should applaud their obsessive efforts to crush any exit valves on
abusive tax practices by them, and not just tax avoiders or evaders?

 _With the support of the G20 and the EU, the Organisation for Economic
Cooperation and Development (OECD) therefore drew up international standards
in 2014 to enable countries to exchange bank information automatically. More
than a hundred countries have so far decided to adhere to these standards,
almost half of which have already started to exchange information in 2017.
Participating countries must undertake to treat the data they receive
confidentially and only for tax purposes.

These rules also aim to create a level playing field for all financial centres
by putting an end to tax havens. Countries - or territories - that do not meet
the criteria set out in international standards or that are not cooperative
are included in grey or black lists of the OECD and the EU. “Defensive
measures", in other words sanctions, are envisaged against them._

------
somberi
A related read: Swiss bank employees who are domiciled outside Switzerland are
exempt from Swiss banking secrecy laws.

[https://www.economist.com/finance-and-
economics/2018/10/18/a...](https://www.economist.com/finance-and-
economics/2018/10/18/a-court-ruling-knocks-another-hole-in-swiss-banking-
secrecy)

Also at [https://archive.is/lbO8j](https://archive.is/lbO8j)

