10 ms·

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 fil

by dbrgn 7y ago

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.

throwaway4792 7y ago
Definitely understand that it feels like a slap in the face given Switzerland's tradition of bank secrecy, but the reason these (multinational) banks now do this is that, generally speaking, they and their customers are paying a modest inconvenience for their past criminal actions. These banks are not solely Swiss; they are multinational corporations and were probably breaking the law. Maybe not Swiss law, but the law of countries they had a nexus with. https://en.wikipedia.org/wiki/UBS_tax_evasion_controversies https://en.wikipedia.org/wiki/UBS_tax_evasion_controversies https://www.accountingtoday.com/articles/a-top-swiss-bank-settles-tax-evasion-dispute-a-decade-after-secrecy-began-to-crumble https://www.accountingtoday.com/articles/a-top-swiss-bank-se... https://www.independent.co.uk/news/business/news/swiss-bank-accounts-not-secret-tax-avoidance-money-laundering-crackdown-a7507696.html https://www.independent.co.uk/news/business/news/swiss-bank-... https://www.channelnewsasia.com/news/commentary/1mdb-najib-razak-jho-low-money-laundering-swiss-bank-accounts-10616388 https://www.channelnewsasia.com/news/commentary/1mdb-najib-r...
ekianjo 7y ago
> US that collects taxes based on citizenship and not based on residence is Eritrea I believe Japan also does that, for a few years now.
- paulsutter 7y ago
  No Japan does not tax Japanese citizens with foreign residency. They did start an exit tax for departing Japan residents to discourage this. Japanese tax residency has a slippery legal definition, tax residency begins the day after you enter the country “for a purpose exceeding one year” (as determined by the tax authorities not you). So they do often challenge foreign residency claims.
GuiA 7y ago
There’s a very active association of French people with US nationality - because they were born on US soil, but moved back to France soon after, in some cases because their parents were briefly working there, or on vacation and thought it’d be nice for their kid to have the US nationality - advocating against this. “The association of Accidental Americans”: https://www.americains-accidentels.fr/ https://www.americains-accidentels.fr/
nradov 7y ago
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 7y ago
  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.
  - kube-system 7y ago
    The most obvious is something like state department emergency assistance, but there's plenty of US government programs without a residency requirement. For example: federal student aid doesn't require US residency. https://studentaid.ed.gov/sa/types/international https://studentaid.ed.gov/sa/types/international Also, the taxes that the US imposes on citizens overseas has some pretty significant exceptions. US citizens can deduct over $100,000 worth of their foreign-earned income and part of their housing expenses.
    - Scoundreller 7y ago
      That’s part of the mess: the US tax system isn’t the same as others’, so you now have to optimize for 2 systems. Differing rules of what’s a short-term vs long term capital gain. E.g.: Canada doesn’t tax capital gains on your Primary residence when you sell it, but US does. And buying a non-US ETF can create another tax mess since you’ve now bought into a multibillion dollar trust that doesn’t file with the US gov. The US doesn’t see your Canadian Tax-free savings account as tax free, so now you have to keep track of every transaction in there.
jjcm 7y ago
For myself (a US citizen living abroad), my biggest annoyance isn't that I'm taxed on my income overseas, it's that it effectively is taxation without representation. Even though I'm paying tax overseas, there's no US Representative who fights for my interests. I have one who fights for the interests of the residents of a district I lived in years ago, but I have no relation to that anymore. I have a US senator who fights for the interest of the state listed on my old drivers license, but none who represent me as an expat. The US was founded precisely because those who were living overseas had no representative fighting for their rights, yet they were still taxed. The same thing is happening today. What I want isn't for this tax to stop, it's to have representation.
- mulmen 7y ago
  This is an interesting point. Can you vote in elections at all? I'm curious as to the nature of the representation you desire. Would there be some kind of "expat" state with senators and representatives? How would this compare to the representation of territories like Puerto Rico?
- tzs 7y ago
  There are enough US citizens abroad to justify about 7 or 8 members of the House of Representatives, but how would you allocate them? There are enough in Mexico, and enough in Canada, and maybe enough in the Philippines to have one Representative for each of those. The rest, though, are sufficiently spread out that when you group enough different countries together to get enough US citizens for a Representative, that Representative will have such a diverse group of constituents with such diverse concerns that it is not clear the Representative could actually effectively represent them.
  - andylynch 7y ago
    Maybe the US could look to France again - since they do just this in their National Assembly, and also have representatives for citizens aboard in the Senate https://en.m.wikipedia.org/wiki/Constituencies_for_French_residents_overseas https://en.m.wikipedia.org/wiki/Constituencies_for_French_re...
cjslep 7y ago
The US tax comes from the Union in the Civil War. Fearing their wealthy base would flee to Europe to dodge Civil War tax hikes, they passed the citizenship based tax to ensure the war could continue to be funded. Of course once a government adds a tax it's very hard to eliminate it, so here I am still paying a Civil War tax, an American living in Switzerland.
zhdc1 7y ago
As an American citizen living in Switzerland, it's somewhat of an impertinence that I'm essentially limited to using one bank - Post Finance - when Germany and a number of other countries with large expat populations here now ask for and receive the same information on their citizens. Edit: I also want to add that you're referring to income taxes. Several European countries collect wealth tax on global assets.
- huhtenberg 7y ago
  > limited to using one bank An easy solution is to trade your US citizenship to a Swiss one. It takes just 5 years on permit C. > Several European countries collect wealth tax on global assets. Including Switzerland.
  - zahllos 7y ago
    > It takes just 5 years on permit C This is accurate, however, you need to spend at least 5 years in Switzerland to apply for a C permit and have been resident a minimum of 10 years in Switzerland in total, including the last 5 continuously. You'll also need to meet minimum cantonal and communal residency requirements, so if you move canton or even communue at 9 years 11 months, you'll probably have to wait another few years. The process itself will take a few years also. After all that, you are still defined as a "US Person" for tax purposes and thus banks are required to disclose your information to the US. US Persons are any person with tax liability to the US. You're tax-liable as a citizen (also as a green card holder or possibly a married partner of a US citizen). So having spend 12-13 years minimum in Switzerland to get a passport, you then have to give up your US passport, which will take time and is also permanent. Usually it doesn't take 12-13 years minimum with stringent residency requirements and the requirement to learn a foreign language to open a bank account ;) All that said, it is my understanding that the PostFinance-only thing was a reaction to the Credit Suisse fine from 2014. After that, Swiss banks closed accounts and mortgages of Americans without warning as a way to avoid any future risk - a bit extreme, but they were in a legal pickle: Swiss law prohibits them from disclosing account information to anyone not at the bank and includes custodial sentences for the disclosing employee. There was thus no mechanism for disclosure to the US that was actually (at the time) legal in Switzerland. This has been remedied. Banking secrecy still exists, but banks are allowed to transfer information to the Confederation (Swiss Federal Government) and the Confederation can of course then transmit it onward to the relevant parties. Even more bizarrely, the whole FATCA issue was mostly about wealthy US residents using offshore tax havens to avoid taxes, not your average expat who simply wants a bank account. I believe that US expats can now open accounts at Swiss banks other than PostFinance again, although I caveat that statement by saying I'm not a US person.

by dbrgn 7y ago

throwaway4792 7y ago

Definitely understand that it feels like a slap in the face given Switzerland's tradition of bank secrecy, but the reason these (multinational) banks now do this is that, generally speaking, they and their customers are paying a modest inconvenience for their past criminal actions. These banks are not solely Swiss; they are multinational corporations and were probably breaking the law. Maybe not Swiss law, but the law of countries they had a nexus with. https://en.wikipedia.org/wiki/UBS_tax_evasion_controversies https://en.wikipedia.org/wiki/UBS_tax_evasion_controversies https://www.accountingtoday.com/articles/a-top-swiss-bank-settles-tax-evasion-dispute-a-decade-after-secrecy-began-to-crumble https://www.accountingtoday.com/articles/a-top-swiss-bank-se... https://www.independent.co.uk/news/business/news/swiss-bank-accounts-not-secret-tax-avoidance-money-laundering-crackdown-a7507696.html https://www.independent.co.uk/news/business/news/swiss-bank-... https://www.channelnewsasia.com/news/commentary/1mdb-najib-razak-jho-low-money-laundering-swiss-bank-accounts-10616388 https://www.channelnewsasia.com/news/commentary/1mdb-najib-r...

ekianjo 7y ago

> US that collects taxes based on citizenship and not based on residence is Eritrea I believe Japan also does that, for a few years now.

paulsutter 7y ago
No Japan does not tax Japanese citizens with foreign residency. They did start an exit tax for departing Japan residents to discourage this. Japanese tax residency has a slippery legal definition, tax residency begins the day after you enter the country “for a purpose exceeding one year” (as determined by the tax authorities not you). So they do often challenge foreign residency claims.

GuiA 7y ago

There’s a very active association of French people with US nationality - because they were born on US soil, but moved back to France soon after, in some cases because their parents were briefly working there, or on vacation and thought it’d be nice for their kid to have the US nationality - advocating against this. “The association of Accidental Americans”: https://www.americains-accidentels.fr/ https://www.americains-accidentels.fr/

nradov 7y ago

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 7y ago
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.
- kube-system 7y ago
  The most obvious is something like state department emergency assistance, but there's plenty of US government programs without a residency requirement. For example: federal student aid doesn't require US residency. https://studentaid.ed.gov/sa/types/international https://studentaid.ed.gov/sa/types/international Also, the taxes that the US imposes on citizens overseas has some pretty significant exceptions. US citizens can deduct over $100,000 worth of their foreign-earned income and part of their housing expenses.
  - Scoundreller 7y ago
    That’s part of the mess: the US tax system isn’t the same as others’, so you now have to optimize for 2 systems. Differing rules of what’s a short-term vs long term capital gain. E.g.: Canada doesn’t tax capital gains on your Primary residence when you sell it, but US does. And buying a non-US ETF can create another tax mess since you’ve now bought into a multibillion dollar trust that doesn’t file with the US gov. The US doesn’t see your Canadian Tax-free savings account as tax free, so now you have to keep track of every transaction in there.

jjcm 7y ago

For myself (a US citizen living abroad), my biggest annoyance isn't that I'm taxed on my income overseas, it's that it effectively is taxation without representation. Even though I'm paying tax overseas, there's no US Representative who fights for my interests. I have one who fights for the interests of the residents of a district I lived in years ago, but I have no relation to that anymore. I have a US senator who fights for the interest of the state listed on my old drivers license, but none who represent me as an expat. The US was founded precisely because those who were living overseas had no representative fighting for their rights, yet they were still taxed. The same thing is happening today. What I want isn't for this tax to stop, it's to have representation.

mulmen 7y ago
This is an interesting point. Can you vote in elections at all? I'm curious as to the nature of the representation you desire. Would there be some kind of "expat" state with senators and representatives? How would this compare to the representation of territories like Puerto Rico?
tzs 7y ago
There are enough US citizens abroad to justify about 7 or 8 members of the House of Representatives, but how would you allocate them? There are enough in Mexico, and enough in Canada, and maybe enough in the Philippines to have one Representative for each of those. The rest, though, are sufficiently spread out that when you group enough different countries together to get enough US citizens for a Representative, that Representative will have such a diverse group of constituents with such diverse concerns that it is not clear the Representative could actually effectively represent them.
- andylynch 7y ago
  Maybe the US could look to France again - since they do just this in their National Assembly, and also have representatives for citizens aboard in the Senate https://en.m.wikipedia.org/wiki/Constituencies_for_French_residents_overseas https://en.m.wikipedia.org/wiki/Constituencies_for_French_re...

cjslep 7y ago

The US tax comes from the Union in the Civil War. Fearing their wealthy base would flee to Europe to dodge Civil War tax hikes, they passed the citizenship based tax to ensure the war could continue to be funded. Of course once a government adds a tax it's very hard to eliminate it, so here I am still paying a Civil War tax, an American living in Switzerland.

zhdc1 7y ago

As an American citizen living in Switzerland, it's somewhat of an impertinence that I'm essentially limited to using one bank - Post Finance - when Germany and a number of other countries with large expat populations here now ask for and receive the same information on their citizens. Edit: I also want to add that you're referring to income taxes. Several European countries collect wealth tax on global assets.

huhtenberg 7y ago
> limited to using one bank An easy solution is to trade your US citizenship to a Swiss one. It takes just 5 years on permit C. > Several European countries collect wealth tax on global assets. Including Switzerland.
- zahllos 7y ago
  > It takes just 5 years on permit C This is accurate, however, you need to spend at least 5 years in Switzerland to apply for a C permit and have been resident a minimum of 10 years in Switzerland in total, including the last 5 continuously. You'll also need to meet minimum cantonal and communal residency requirements, so if you move canton or even communue at 9 years 11 months, you'll probably have to wait another few years. The process itself will take a few years also. After all that, you are still defined as a "US Person" for tax purposes and thus banks are required to disclose your information to the US. US Persons are any person with tax liability to the US. You're tax-liable as a citizen (also as a green card holder or possibly a married partner of a US citizen). So having spend 12-13 years minimum in Switzerland to get a passport, you then have to give up your US passport, which will take time and is also permanent. Usually it doesn't take 12-13 years minimum with stringent residency requirements and the requirement to learn a foreign language to open a bank account ;) All that said, it is my understanding that the PostFinance-only thing was a reaction to the Credit Suisse fine from 2014. After that, Swiss banks closed accounts and mortgages of Americans without warning as a way to avoid any future risk - a bit extreme, but they were in a legal pickle: Swiss law prohibits them from disclosing account information to anyone not at the bank and includes custodial sentences for the disclosing employee. There was thus no mechanism for disclosure to the US that was actually (at the time) legal in Switzerland. This has been remedied. Banking secrecy still exists, but banks are allowed to transfer information to the Confederation (Swiss Federal Government) and the Confederation can of course then transmit it onward to the relevant parties. Even more bizarrely, the whole FATCA issue was mostly about wealthy US residents using offshore tax havens to avoid taxes, not your average expat who simply wants a bank account. I believe that US expats can now open accounts at Swiss banks other than PostFinance again, although I caveat that statement by saying I'm not a US person.