Financial Secrecy Lost
For many years the Swiss provided bank secrecy for all accounts held in their country. As a result many Jews opened accounts in Switzerland to hide their funds from the Nazis. That was good. The Swiss maintained their bank secrecy until the USA, in an attempt to pay for its perpetual wars, decided that any of its citizens who had funds in secret Swiss bank accounts should be required to pay tax on the earnings of those accounts. To do that they need the bank account information. At one point they had to rely on paying individuals to steal that. Employees of Swiss banks were bribed to steal account information and pass it on to the US Government. Buying stolen property is only a crime if you are an individual, therefore governments can steal or trade in stolen property. It is an unwritten law. This began to be expensive and frowned upon.
The Swiss ordinarily would have ignored the pleas of war mongers to cough up information to finance their enterprise however 25 years ago the Swiss banks made a critical mistake. They began operating in the USA and established a large presence there. As a result the USA had a threat to hold over them. The confiscation of their US assets and revocation of their banking licenses. I have always maintained that it is inappropriate to have your assets in a place where they can be stolen. The Swiss bankers did not listen to me.
To bring the rest of the world in line the US passed an act placing a heavy withholding tax on income from US assets paid outside of the US unless the recipient country has agreed to pass on the bank information of any US citizens in the recipient country.Yes this is an extra territorial application of US law, but when you’ve already crossed the threshold of dealing in stolen property why stop there.
There has been the usual unintended consequences of this action. As the law applies to all US citizens whether domiciled in the US or elsewhere, the number of expatriates renouncing their US citizenship is rising dramatically. If however you are renouncing for tax purposes it may very difficulty and costly. In the same way the Nazis extracted exit tax from the Jews the IRS is fleecing US citizens who exit from their grip
I manage money offshore and some of my service providers have closed the accounts of my US and Canadian clientele, others refuse to hold US investments. Another consequence is that many foreign jurisdictions will no longer accept US citizens as holders of bank accounts or beneficial ownership of assets.The end result has been to find solutions and they do exist. What they are accomplishing is shrinking the size of US investments held by foreigners and a flight from US citizenship.
The fee to renounce US citizenship has been raised a factor of ten fold in the past two years giving the US Government a previously unrecognized source of income.
alex@alexdoulis.com 416 955 9511
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