• 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
UN panel calls for Assange to be freed
Photo: David G. Silvers

UN panel calls for Assange to be freed
2 hours ago

WikiLeaks founder Julian Assange has been arbitrarily detained by both Sweden and Britain, says a Geneva-based UN panel, which called on both countries to release him and pay him compensation.

Lausanne cathedral packed for top chef's funeral
Photo: Laurent Gillieron/Pool/AFP

Lausanne cathedral packed for top chef's funeral
3 hours ago

More than 1,500 people filled Lausanne's cathedral on Friday for the funeral of Benoît Violier, the top French-Swiss chef who died in an apparent suicide.

Julius Bär bank to pay US $547 million over tax fraud
Photo: Fabrice Coffrini/AFP

Julius Bär bank to pay US $547 million over tax fraud
5 hours ago

Swiss private bank Julius Bär says it has finalized an agreement with US authorities, paying $547 million to end a criminal investigation into claims that it helped rich Americans dodge taxes.

Skier dies after missing turn at Toggenburg
Skiers at Toggenburg. Photo: Switzerland Tourism

Skier dies after missing turn at Toggenburg
6 hours ago

A 47-year-old man has died after failing to negotiate a turn while skiing at Toggenburg in eastern Switzerland.

New rail tunnel proposed under an Alpine pass
Rendition showing crosscut view of proposed tunnel. Photo: Canton of Valais

New rail tunnel proposed under an Alpine pass
7 hours ago

Yet another Alpine railway tunnel is in the works for Switzerland — but this one would also carry electrical transmission lines.

UN tells France to enforce smacking ban
Photo: AFP

UN tells France to enforce smacking ban
8 hours ago

France, which has come under fire for not fully banning smacking, must "explicitly prohibit" all forms of corporal punishment of children, says a UN report that criticized its treatment of Roma and asylum-seeking minors.

Swiss real estate 'bubble risk' continues to rise
Map shows areas most exposed to high property prices. Image: UBS

Swiss real estate 'bubble risk' continues to rise
20 hours ago

The risk of a real estate bubble in Switzerland has reached its highest level since the late 1980s, according to a UBS report.

Italian man dies in Alpine resort chalet fire
View of Villars, where the fire broke out. Photo: Office du Tourisme Villars

Italian man dies in Alpine resort chalet fire
20 hours ago

UPDATED: An Italian man died after being trapped in a fire on Wednesday that ripped through an apartment building in Villars-sur Ollon, a mountain ski resort town in the canton of Vaud.

Geneva school cleared after bomb threat
A building at the Geneva International School. Photo: Wikimedia Commons

Geneva school cleared after bomb threat
1 day ago

Police are investigating a bomb threat that forced the evacuation of around 2,000 students from a campus of the Geneva International School on Thursday.

Airlines carry more passengers in 2015: IATA
1 day ago

Global air passenger traffic jumped 6.5 percent in 2015 compared to the previous year, boosted largely by lower air fares, the Geneva-based IATA says.

Sponsored Article
US taxes and FATCA: 'The time for hiding is over'
National
'World's best chef' commits suicide in village near Lausanne
Features
Zurich celebrates centennial of quirky Dada artistic movement
Education
Children in village school told to speak German or pay 'penalty'
Features
Swiss provide multiple resources to support 'sexy' startup trend
National
Swiss citizens to vote this summer on guaranteed income for all
Culture
Geneva authorities back art museum expansion with Jean Nouvel design
National
Luxury hotel conversion in Vevey runs into financial trouble
National
World Economic Forum: Davos soldiers test positive for cocaine use
Switzerland had secret 'peace deal' with PLO to prevent attacks
Technology
VIDEO: Drone takes you to the heart of a Swiss glacier
Business & Money
Leonardo DiCaprio in Davos slams 'greed' of fossil-fuel industry
National
Miniature scale model of city of Geneva goes on public display
International
Politician and ex-head of Swiss Post among dead in Burkina Faso attack
National
Revealed: Swiss authorities strip refugees of cash and valuables
National
Spectacular video of avalanche near Zermatt illustrates dangers
Business & Money
GE announces plans to slash 1,300 Swiss jobs at Alstom plants
Sport
Fifa museum set to open in Zurich next month as scandal continues
National
Is climate change ruining skiing at resorts in the Swiss Alps?
Culture
Bowie's discreet two decades in Switzerland remembered
National
Switzerland's unemployment rate surges to highest level in five years
National
'Excellent' Swiss wine touted for 2015 vintages despite lower production
National
Medieval Swiss lakeside town plans 'spectacular' festival of lights
Technology
Zurich and Lausanne institutes of technology launch 43 startups
4,441
jobs available