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FATCA deal takes effect after referendum failure

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FATCA deal takes effect after referendum failure
22:13 CET+01:00
The FATCA tax evasion accord between the US and Switzerland is taking effect after a bid to put the agreement to a Swiss referendum failed to gather enough signatures, news media reported on Tuesday.

The referendum committee, backed by right-wing politicians, gathered around 31,000 signatures, short of the 50,000 necessary for a public vote, the ATS news agency said.

Olivier Delacrétaz, chairman of the Ligue vaudoise, one of the groups opposing the FATCA deal, aimed at combatting tax evasion by Americans with offshore accounts, expressed disappointment at the outcome.

“To have collected 31,000 signatures, it’s not insignificant,” he told ATS.

Delacrétaz explained the shortfall by saying the issue was hard to explain to the public.

But he acknowledged there was perhaps a sentiment amongst the public of the culpability of Swiss financial institutions.

“Some Swiss consider without doubt that banks must pay because some of them committed irregular practices,” he said.

FATCA, the Foreign Account Tax Compliance Act, enacted in 2010, obliges American citizens to report their financial accounts held outside the United States.

Under the accord approved by Swiss government last year, financial institutions in Switzerland are required to report to the Internal Revenue Service about their American clients.

It is part of an agreement hammered out between authorities in Bern and Washington to resolve a dispute between the two nations over the tax evasion issue.

The referendum campaign against the accord was launched in October 2013.

SEE ALSO: How Americans have fallen out of favour with Swiss banks

The deal only affects the taxation of future American accounts, ATS noted.

The transfer by Swiss banks of American client account details requires the approval of the account-holder, otherwise the information will be forwarded anonymously.

Further details can only obtained by US authorities through a specific request to Bern for administrative assistance.

American citizens living in Switzerland have already begun to feel the sting of FATCA because many Swiss banks, anticipating the implementation of the accord, have been reluctant to deal with US clients because of the future paperwork involved.

American Citizens Abroad, a Swiss-based group representing expats, has complained of Americans who have seen their Swiss bank accounts closed or who are unable to open an account.

“For US persons living here, there are solutions but it’s very, very complex,” Martin Naville, CEO of the Swiss-American Chamber of Commerce told The Local last year.

Washington’s crackdown on tax cheats has intensified since Switzerland’s largest bank, UBS, agreed to pay the US government a $780-million penalty in 2009 to avoid prosecution for aiding Americans dodge taxes.

The bank also agreed to hand over details of more than 4,000 accounts held by US citizens suspected of tax evasion.

While Switzerland’s banking secrecy laws have not changed, measures such as FATCA appear to be eroding the ability of Swiss banks to give ironclad assurances about banker-client confidentiality. 

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