• Switzerland's news in English
 

Americans fall out of favour with Swiss banks

Catherine McLean · 2 Apr 2013, 13:18

Published: 02 Apr 2013 13:18 GMT+02:00

Last year, the Swiss bank where he held an account for nine years informed him he should take his business elsewhere. Faced with onerous US tax reporting rules set to come into effect in 2014, the bank decided the costs were too great and that cutting ties with Bloomfield and other American customers would be preferable.

They weren’t the only ones coming to this conclusion, Bloomfield learned when he was rejected by another Swiss cantonal bank. “When the fellow heard my name, he said no chance,” Bloomfield tells The Local. “He was very nice. He simply said it’s too complicated, costs too much money, we don’t want to take that risk.” Bloomfield eventually moved his account to the Raiffeisen bank, where he already had a mortgage.

Many Americans in Switzerland, like Bloomfield, are finding the welcome mat gone from the doorstep of their local bank. Some banks are closing the accounts of Americans who live in Switzerland, while others are refusing to grant them mortgages or loans. 

Swiss banks have come under intense scrutiny by the US government in recent years amid its worldwide crackdown on tax avoidance and banking secrecy. Banking giant UBS was slapped with a $780-million fine by US authorities in 2009, while the country’s oldest bank Wegelin & Co. closed its doors after pleading guilty this year in a US court to helping rich Americans avoid paying their taxes.

Already battle-scarred from the hard lessons of recent years, Swiss banks are taking a very cautious approach when it comes to the introduction of the Foreign Account Tax Compliance Act (FATCA). The US law requires banks around the world to report information on American account holders to Uncle Sam. Failure to comply will result in significant financial penalties in the form of 30 percent withholding taxes.

“For American citizens abroad, life is going to get even tougher,” Martin Naville, chief executive officer of the Swiss-American Chamber of Commerce candidly tells The Local. “For US persons living here, there are still solutions but it’s very, very complex,” Naville says. “For most of the banks, the easiest thing to be FATCA compliant is to just send a letter to the IRS once a year saying we have no US persons here. Any US person gives you additional work.”

These actions are forcing some Americans in Switzerland to make difficult decisions, including giving up their US passport. Bloomfield’s experience with his bank, for example, made him nervous about further financial uncertainty down the road as a result of his American passport. “I need to have a bank account in Switzerland,” he says. “I don’t want to be surprised by a bank saying you need pay up your mortgage within six months.” Last October, Bloomfield went to the US embassy to renounce his American citizenship. He has held a Swiss passport since 2007.

“After 30-some years, I guess I’m more at home here than in the United States,” Bloomfield says. “Of course you can never crawl out of your skin . . . my American heritage I didn’t give up at the embassy.”

He’s not the only one choosing this route: 411 Americans in Switzerland gave up their US citizenship in the first nine months of 2012, compared with 180 in 2011, according to a report last year from swissinfo.

Fellow American Jackie Bugnion, who has lived in Switzerland for 48 years, say FATCA is hitting American expats hard. As a director for Americans Citizens Abroad (ACA), she is helping lead the charge to repeal the legislation. FATCA is leading to conflict and uncertainty between some American-Swiss couples, for example, as the Swiss spouses don’t want to give the IRS access to their financial records, Bugnion tells The Local. She says that one woman said she was on the verge of divorce as a result of the tax changes.

ACA is working on a residence-based taxation proposal to tax Americans abroad in the same manner as non-resident foreign nationals, eliminating the need for banks abroad to treat these expats as American citizens, she explains.

“It’s very stressful for the American community overseas,” says Bugnion, who herself has had two investment accounts closed with Swiss banks. She calls FATCA “the straw that has broken the camel’s back".  

“There are a lot of people out there panicked.”

There are also concerns that FATCA’s collateral damage could extend beyond the home front into the business world. If an American owns more than ten percent of a company, it is reportable to the IRS. The worry is that this rule may make it harder for US entrepreneurs to find business and banking partners, shutting them out of attractive investment opportunities.

This is a concern for Ron Banks, an executive committee member of the American International Club of Geneva who has lived in Switzerland for 18 years. An entrepreneur, he believes FATCA could have far-reaching implications, making it more difficult to set up a company and to do business. “Americans are being kicked out of partnerships because the European partners don’t want Uncle Sam looking at their books,” says Banks, who is also vice executive director at ACA.

Despite the banking problems,  Americans say Swiss are sympathetic to their woes with the taxman. Indeed, if FATCA kindles anti-American feelings at all, its is from US citizens living around the world. Bugnion says normally the American community overseas are the “best ambassadors” for the US. But when expats feel like they’re being flattened by a “steamroller”, she says,  they’re not being so diplomatic about their home country. “That’s very, very bad for the United States.”

Catherine McLean (news@thelocal.ch)

Your comments about this article

2013-04-02 18:39:26 by allamericangrl
My husband is Swiss and I am American and we went through the same thing with 4 different banks. Finally I just gave in and our soon to be built new home will have to be under hubby's name until - well hopefully they change the laws and the banks want to "deal" with Americans! But no way will I be giving up my citizenship because of a bank! thats just crazy to me!
2013-04-03 21:58:39 by SwissTechie
allamericangrl, it is not the banks which are the problem, but rather US policy. Being an American under such conditions is like being a victim of domestic abuse. Eventually, one will have to choose to leave the abusive spouse to avoid the beatings, since nothing exists to show that the abusive spouse will become less abusive.
2013-04-08 11:12:22 by Mikefint
I have been watching the treatment of Americans by their banks and have been totally appalled.

However, rules may change but so do the solutions. Issues such as opening bank accounts, wishing for diversification on pension funds such as your existing 401k's and IRA's. These types of vehicles can all help reduce your annual filling costs aswell.

If you require any further information please get in contact.

2013-04-11 08:51:56 by richifield
allamericangirl, the banks' reaction to the FATCA-law was the last drop making the barrel overflow. (The straw that breaks the camel's back is not appropriate. I don't feel "broken" in any way.) I have no intention of returning to the US to live. After 30 years in Switzerland I often feel like a foreigner in the US. My emotional ties to the US have grown weaker and weaker over the years. And US-American arrogance on the world stage has often made me feel uncomfortable with a US passport in my pocket. Crazy? Perhaps just realistic and practical. I long ago stopped believing that the US was the best naiton in the world. There are many nations that have made very substantial contributions to the good of humankind. And even without a passport/citizenship my roots remain "made in USA".
Today's headlines
Iconic Swiss train heads to Swedish museum
Photo: SBB

Iconic Swiss train heads to Swedish museum

8 minutes ago

One of Swiss Federal Railways (SBB) emblematic locomotives headed out of the country on Monday for a final trip — to a transport museum in Sweden.

Seven climbers and hikers die in Swiss Alps
View of the Täschhorn near Saas Fee. Photo: Valais cantonal police

Seven climbers and hikers die in Swiss Alps

3 hours ago

At least seven people died in the Swiss Alps while climbing or hiking at the weekend, police report.

Alpine dam disaster remembered 50 years on
Aerial view of Mattmark dam. Photo: Switzerland Tourism

Alpine dam disaster remembered 50 years on

13 hours ago

More than 1,000 people gathered at the Mattmark hydro dam in the canton of Valais Alps on Sunday to commemorate the 50th anniversary of a natural disaster that killed 88 workers, including 56 Italians.

Migrant crisis
Swiss pledge help for Balkans on refugee crisis
A Syrian couple waits with other migrants for the train near a train station in Macedonia. Photo: Aris Messinis/AFP

Swiss pledge help for Balkans on refugee crisis

17 hours ago

Switzerland said on Sunday it was planning to send financial assistance to help Balkans nations cope with the massive numbers of migrants and refugees passing through in a bid to reach the European Union.

One million throng Zurich techno party
Photo: Verein Street Parade, Zurich

One million throng Zurich techno party

20 hours ago

Around one million people thronged the streets of a sun-drenched Zurich on Saturday to take part in the city's annual techno Street Parade, organizers said.

Migrant crisis
Swiss join bid to combat refugee smuggling
Forensic officers work at a truck found to contain dead migrants on a motorway in Austria on Thursday. Photo: Dieter Nagl/AFP

Swiss join bid to combat refugee smuggling

2 days ago

Switzerland, Germany and Italy are preparing to launch a joint task force to detect and dismantle networks smuggling refugees and migrants into Europe, Swiss authorities said on Friday.

Nestlé accused in US of 'slave labour' cat food
Nestlé headquarters in Vevey in the canton of Vaud. Photo: Nestlé

Nestlé accused in US of 'slave labour' cat food

2 days ago

UPDATED: Swiss-based food giant Nestlé on Friday rejected allegations that it had knowingly allowed its Fancy Feast cat food to contain fish from a Thai supplier suspected of using slave labour.

Swiss economy shows surprising growth in Q2
The Swiss economy continues to show resilience. Photo: Mike Chapman

Swiss economy shows surprising growth in Q2

3 days ago

Domestic spending kept Switzerland’s economy expanding in the second quarter as government figures released on Friday showed a surprise upturn in growth.

Italian base jumper dies in Bernese Oberland
Base jumpers in Lauterbrunnen in the canton of Bern. Photo: AFP

Italian base jumper dies in Bernese Oberland

3 days ago

A 46-year-old Italian plunged to his death in the Bernese Alps Thursday after crashing onto rocks during a base jump, the latest in a series of such accidents in Switzerland in the past year, police said.

Manhunt launched after Geneva hotel holdup
Photo: Geneva cantonal police

Manhunt launched after Geneva hotel holdup

3 days ago

Geneva cantonal police launched a hunt for a man suspected of holding up a luxury hotel overlooking Lake Geneva on Thursday, two days after another armed robbery in the city.

RECEIVE OUR NEWSLETTER AND ALERTS

National
Switzerland set to test world's longest train tunnel under the Alps
National
US right-wing think tank: Swiss are freest people in Europe
National
Bottoms up: new signs alert visitors to Zurich's nudist bathing zones
Sport
Swiss man smashes cliff jumping record with 59-metre dive
National
Climate change seen as plus for Switzerland's wine growers
Photo: Federal Housing Office
National
Buying home in Switzerland is 'cheaper than renting'
National
Central bank to launch new high-tech banknotes — six years late
National
Swiss speed climber summits all 4,000m peaks in the Alps
National
Report: Switzerland is world's safest country (barring extreme sports)
National
Where are the top ten spots to visit in Switzerland for tourists?
National
Two Japanese climbers found dead after scaling Matterhorn's summit
National
High Geneva accommodation costs force unpaid UN intern to live in tent
National
Zurich farmer ordered to remove cow bells after noise complaints
National
Gays file criminal complaint against Swiss bishop over speech
National
The Expat Guide: Moving to Switzerland
National
Briton who ends life in Switzerland: 'Ideal shelf life for people is 70'
National
Aargau farmer under fire after pigs gassed to death by own excrement
National
Cows trample German woman to death in Graubünden Alps
National
Hot times: Swiss city to host first naked performance festival
Features
Expat American author's time in Zurich inspires racy bestseller
National
10 amazing places to be on Swiss National Day — or any other day
National
Swiss army pilfers water from French lake for cows in Switzerland
National
Swiss Army airlifts water to thirsty cows facing drought conditions
International
Canary Islands: diver killed in collision with Swiss windsurfer
National
VIDEO: Seagull steals camera for amazing bird's eye selfie
Switzerland celebrates first ascent of Matterhorn
Politics
Immigrant recruits may not be loyal: Swiss defence minister
Solar Impulse 2 round-the-world flight halted for repairs
Society
Teenager gets high on vegetarian meal at Zurich club
National
Greece seeks tax revenues from assets 'hidden' in Swiss banks
Culture
Paris police arrest Swiss artist for naked Eiffel Tower selfies
National
Scientists uncover largest Swiss dinosaur skeleton ever found
National
National weather office extends danger alerts as heatwave takes hold
National
Most severe heatwave in Switzerland since 2003 on the way
Travel
Bogglingly expensive Geneva club sandwiches remain 'priciest in world'
Politics
Anti-immigration nationalist party remains most popular: poll
National
Greek finance minister slams Swiss over lack of tax evasion info
Business & Money
Insects proposed for sale in Swiss supermarkets next year
National
'Oh God — I'm coming': noisy lovers' complaint goes public
National
Canton of Ticino threatens closing Italy border to asylum seekers
National
Just in case: Swiss National Bank prepares for Grexit 'crisis'
National
Russian crisis fuelled by sanctions threaten 40,000 Swiss jobs: study
National
Art Basel: Art for art's sake — or to make an investment?
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

4,337
jobs available