Tax service has got Americans abroad

24.02.2012 The law "Foreign Account Tax Compliance Act" (FATCA) was signed by US president Barack Obama in spring, 2010. Last year's scandal between US authorities and the Swiss bank UBS became a push to adopt this law. Then American tax service demanded from bank the information on 19 thousand its clients who ostensibly covered in Switzerland their savings from taxes. UBS long resisted sharing this information, but, finally, the parliament of Switzerland approved the transfer to the USA the information on 4450 clients of bank.

FATCA passed in the USA contains a set of measures on maintenance of a transparency of monetary operations of Americans abroad. In particular, the law provides 30 percent deduction on the payments made to the foreign organizations, in case of default from granting of data on the American holders of accounts. Also it contains the requirement to the persons having foreign actives, necessary to declaring for the sum more than 50 thousand US dollars to give the information on tax returns on them. If such report is not presented, the penalty at a rate of 50 thousand dollars will be raised. Besides, FATCA enters penalties at a rate of 40 percent on the payments which are carried out on unsolved foreign financial actives.

The American Citizens Abroad association (ACA) asserts that has already faced 60 cases when banks simply refused to Americans access to their services. The headquarters of this organization is in Geneva and unites 5.2 million American citizens living abroad. On the site of this Association you can find complaints from the fellow citizens.

In spite of the fact that FATCA should come into force not earlier than 2013, natives of the USA have already begun to suffer from it.
The Swiss banks association worries concerning administrative expenses which will be caused by the acceptance of FATCA. Some banks consider these expenses so considerable that already now refuse to establish client relations with the American citizens.

The European bank federation representing the interests of 5 000 banks also has expressed the concern about costs which FATCA will cause.
Most of all ACA irritates the fact that this new law breaks inviolability of private life of the American citizens abroad.

For example, an American who is living in marriage with a foreigner and bringing up children with him can't open joint deposit with her husband. Otherwise she should show to American tax department all incomes of her husband though the spouse hasn’t any relationship with the United States. She can put into her account only 9 999 dollars if this sum is more, she have to fill numerous tax declarations, - ACA describes possible situation in such way.

Meanwhile experts have counted up the list of documents, which are necessary for knowing to the American expatriate before the filling of tax declaration: these documents are more than 4700 pages.

Expert’s opinion

In 1507 America, discovered by Columbus in 1492, was recognized the separate continent and named by researcher Amerigo Vespucci. In 9 years, on November, 29th, 1516, Switzerland concluded the contract with France in which there was a formulation about "everlasting peace". It is considered, that exactly after this event Switzerland began to undertake purposeful steps to the direction of neutrality construction. (The USA then wasn't even in plans.)

"The Treaty Utrecht", concluded by France, Spain, the Netherlands and England in 1713 assigned to Switzerland neutrality. (Before the declaration of independence in 1776 year there were as early as 63 years.) On November, 20th, 1815 Austria, Great Britain, Portugal, Prussia, Russia and France in Paris signed "The Treaty Guarantee Act" which definitively fixed and concretized the neutrality of Switzerland. (39 years from the Independence Day, the Treaty of Gent finished Anglo-American war of 1812.)

Let’s speak about our days. There is the ultimatum to the whole world - either with us, or against us. The parliament of Switzerland approves the amendment and opens bank secret. Now the USA demands the same from whole world banks... Requirements are formulated "softly": give the data on USA citizens. But if the information is not opened, dollar corresponding accounts will be closed and everybody who keeps for this "archaism" - bank secret, will be subjected to prosecution.

And even European countries guarantees can't protect the Swiss banks from arrival of USA tax service. The unique hope is to stop to open accounts for USA residents. That actually occurs in many banks worldwide.

Pay attention: bank managers especially underline at the citation of advantages of opening of the account in this or that bank, that they don't open the account to the American companies and the American tax residents. This is "the protection of actives". Keep the savings in banks which have no clients from the USA. Such banks exist!

On the basis: www.irs.gov/formspubs

Lomakin Yaroslav ( managing partner of Honest&Bright)