Switzerland and the United States 21 June published a joint declaration containing key points for possible simplifications in implementing Fatca (report from GenevaLunch 22 June).
Bern says “the aim of the negotiations is to ensure an optimum framework for the Swiss financial industry with regard to the implementation of Fatca and strengthening of the financial centre strategy.”
Behind those words about the Swiss financial centre lie concerns that Swiss banks could be heavily penalized for not complying with the new US rules because of Swiss banking laws that guarantee data privacy. The joint June declaration’s key points don’t mention banking secrecy, but rather Article 271 of the Swiss Criminal Code.
Article 271 covers the criminal act of aiding and abetting a foreign government by providing information illegally. The new framework therefore theoretically protects Swiss banks from prosecution at home by allowing them to give agreed information to the US government without first passing it through the hands of the Swiss government.
But negotiations are still needed to cover how, given Swiss bank privacy laws, a bank can automatically share information with the IRS and what exactly happens when a client is “recalcitrant” and refuses to sign papers giving the bank this right.”
Read more at: Tax Times blog