United States/Switzerland Information Sharing Agreement
On January 24, 2003, the United States and Switzerland agreed to facilitate the exchange of tax information in an effort to ensure that no safe haven exists for funds associated with illicit activities, including tax evasion.
This requires Swiss banks to turn over account and accountholder information in the event that U.S. officials suspect tax fraud. Part of the agreement states: "It is understood that, in response to a request, the requested State shall exchange information where the requesting State has a reasonable suspicion that the conduct would constitute tax fraud or the like. The requesting State's suspicion of tax fraud or the like may be based on:
- Documents, whether authenticated or not, and including but not limited to business records, books of account, or bank account information;
- Testimonial information from the taxpayer;
- Information obtained from an informant or other third person that has been independently corroborated or otherwise is likely to be credible; or
- Circumstantial evidence.
Source: U.S. Department of Treasury
Swiss Bank Accounts, the United States and Beyond
There are no restrictions in the United States against having a Swiss bank account, or any other offshore account for that matter. But, current IRS regulations require U.S. persons to reveal all foreign accounts when they file their annual income tax if more than a total of $10,000 is held in overseas accounts.
Additionally, as a U.S. citizen, green card holder or other subject to U.S. tax, if you invest in American securities through a Swiss bank account, you must declare it to the IRS.
This regulation doesn't apply to any other securities, so if a U.S. person buys British stocks from his or her Swiss bank account they will not pay any tax in Switzerland and will continue to enjoy Swiss bank secrecy.
Other "Secret" Banks
There are a number of countries with banks offering secrecy and "tax havens." The most common ones include:
Anguilla is a British territory in the Eastern Caribbean. It's considered an offshore business center and a tax-free zone.
Belize has offered offshore banking since 1995. Accounts maintained with these banks are not subject to local taxes and their customers are given privacy concerning their account. If the Belize courts find that funds are coming from criminal activity, however, the banks are required to release the identity of the account owner.
Banking secrecy in the Bahamas is not as strong as other countries that offer it. New banking legislation allows banks in the Bahamas to divulge the fact that a particular person or company has an account with that bank.
The Cayman Islands have extensive privacy laws related to banking, and, like Switzerland, officials that break the secrecy law face imprisonment.
Panama is seen by many as a very stable country offering bank privacy.
For lots more information on Swiss Bank Accounts and related information, check out the links on the following page.