• Switzerland's news in English
 
app_header_v3

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
Joy as jazz giants return to Swiss town of Montreux
Charles Lloyd was back on stage at the opening of this year's Montreux Jazz Festival, half a century after he headlined the first festival in the idyllic Swiss town in 1967. Photo: AFP

As saxophone supremo Charles Lloyd pushes out a cascade of soaring notes, jazz aficionados in Montreux sway in rapture.

Terror as tractor tumbles towards Swiss motorway
The tractor narrowly missed falling on to the motorway below. Photo: Obwalden police

A tractor tumbled down a slope and was left hanging precariously over a motorway in the canton of Obwalden on Thursday.

Why Swiss science could suffer badly from Brexit fallout
The EU-funded Human Brain Project is led by Lausanne's EPFL (here receiving funding). Photo: Georges Gobet/AFP

The future of Swiss scientific research is in danger should the country fail to solve its problems with the EU because of Brexit, a leading economist has warned.

Basel suffers wettest six months for 150 years
Parts of Switzerland smashed the half-year record for rainfall. Photo: Jonathan Kos-Read

And the rest of the country has been pretty soggy too.

Jazz icons kick off Montreux's 50th birthday
The Stravinski auditorium. Photo: Fabrice Coffrini/AFP

Two of the world's greatest jazz musicians opened the star-studded 50th edition of the Montreux Jazz Festival on Thursday.

Wimbledon
Injury ends Swiss seed Bencic's Wimbledon
File photo: Sean M Haffey/Getty North America/AFP

The 19-year-old is forced to retire from her second round match with a wrist injury.

Federal fund aims to reduce childcare costs
Photo: Loic Venance/AFP

A 100 million franc fund would ease the burden of childcare for working parents.

Switzerland sets out law on expelling foreign criminals
File photo: Christoph G

The 2010 initiative to expel foreign criminals for serious crimes will come into effect this autumn.

Court fines Muslim father in latest swimming lessons row
Photo: P Cutler

A Muslim father was fined in Switzerland on Wednesday for refusing to allow his daughters to take swimming lessons at school.

Wimbledon
Federer ends British fairytale at Wimbledon
File photo: Carmen Jaspersen/AFP

Brit qualifier Marcus Willis's brief flirtation with Wimbledon fame was ended by Swiss champ Roger Federer on Wednesday.

Sponsored Article
Education abroad: How to find an international school
Photo: Basel Justice and Security Dept
Lifestyle
New signs lay down law and order for Basel prostitutes
Photo: Daniel Orth
Education
Muslim school kids denied passport for refusing swimming lessons
Photo: Emmanuel Dunand/AFP
Politics
Swiss-EU talks ‘must’ resume this summer, says President
Sponsored Article
Why you should attend an international job fair
File photo: Kochtopf
National
Anger as Swiss council plans non-pork school lunches
File photo: Jen/Flickr
Society
Geneva could get 'café fellatio' by end of year
Features
How Switzerland's scenery inspired some of the world's greatest authors
Photo: Fabrice Coffrini/AFP
National
A guaranteed basic income: why did the Swiss say no?
Sponsored Article
Why Swiss hospitality graduates are in demand
Photo: Andreas Gerth/Swiss-Image.ch
Features
Switzerland’s breathtaking Unesco World Heritage sites
Photo: Nestle
Culture
Nestlé celebrates 150 years with museum openings
Photo: Jan Geerk/Swiss-image.ch
National
Report: Swiss are officially ‘good’ for the planet
Photo: Fabrice Coffrini/AFP
National
World agog at bizarre Gotthard Base Tunnel opening
Photo: Coop
Swiss supermarkets look to scrap free plastic bags
Photo: IMD
Business & Money
Report: Swiss economy more competitive than US
Sponsored Article
Avoid hidden fees when sending money overseas
Photo: Aargau police
National
Murderer escapes from Swiss psych hospital
Photo: Grande-Dixence SA/essencedesign.com
Features
8 fantastic reasons to visit French-speaking Switzerland
Photo: Terroir Fribourg
Lifestyle
Swiss village to make world’s biggest meringue
Photo: Swiss Tourism
Features
10 unspoken rules for fitting in with the Swiss
Photo: Alp Transit Gotthard
National
Gotthard base tunnel: what you need to know
Photo: Caroline Bishop
Sport
Swiss cantons team up to vie for winter Olympic games
Photo: Broad Bean Media
National
Basel: Muslim schoolboys must shake hands or face fine
Photo: Emmanual Dunand/AFP
Sport
Brother of Belgian bomber wins gold in Switzerland
Photo: Gstaad Tourism
National
Snow puts end to hottest weekend of year so far
File photo: Abhishek Jacob
Lifestyle
Swiss court vetoes wedding of couple with 50-year age gap
4,649
jobs available