Radio Television Suisse (August 3, 2019)
The glimmer of hope for change in tax policy for Americans living in Switzerland
ACA was recently interviewed by Swiss news agency Radio Television Suisse (RTS). The article highlights the issues of citizenship-based taxation for US dual nationals living in Switzerland and discusses the likelihood for the passage of RBT-style tax reform. ACA’s legal counsel, Charles Bruce, noted that, “the United States invests an enormous amount of energy in chasing down Americans overseas. It isn’t very efficient, it isn’t pleasant for Americans overseas and it is not like there are large sums of money at stake."
The United States is the only country in the world to require their nationals to declare their income wherever they live. Expensive and Bureaucratic: American Citizens Abroad, an organization of Americans Abroad founded 40 years ago in Geneva, is lobbying Congress to change the law.
The US passport can be cumbersome for those living abroad. Anne Hornung-Soukup knows something about this. This Geneva resident who arrived in Switzerland 40 years ago, is a dual national. Although she remains very attached to her American roots, she is frustrated by the demands of the American administration.
Every year, in addition to paying her taxes in Switzerland, she spends several thousand francs on professional fees to have her US tax returns prepared. Sometimes, depending on the declared income, the IRS assesses her a few hundred dollars in tax. "Even if it is only 300 dollars or 800 dollars each year, it is a hard pill to swallow," says Anne Hornung-Soukup.
Taxation based on residence.
It is to put an end to this regime, deemed unfair to Americans abroad and those who lobby for change, among them American Citizens Abroad (ACA), and in an effort to change the rules, a bill has been introduced in Congress for consideration. The bill, introduced by Republican Congressman George Holding of North Carolina, aims to put an end to taxation based on nationality and to adopt the principle of taxation based on place of residence, the system used by rest of the world.
Will this bill pass into law? ACA's legal counsel, attorney Charles Bruce, believes there is a 50% chance. According to him it's only a matter of time: "I think it will happen sooner or later but as soon as possible, I hope." Charles Bruce believes that taxation of Americans on the basis of nationality is “crazy. “The United States is investing lots of energy into chasing Americans abroad, it's not very efficient, it's not very much fun for Americans overseas, and it is not like there are large sums of money at stake."
"An instrument of control"
So, will this change happen tomorrow? Will this injustice be addressed soon? David Forbes-Jaeger does not believe it. For this Geneva-based lawyer born in the United States, Americans abroad do not really count and they are looked upon with suspicion. "Americans who have lived long outside the country are suspected of no longer liking [the country] considered heaven on earth [the US]," says David Forbes-Jaeger.
And then there is another argument for not changing the system, according to the lawyer. "I do not think that the United States is willing to change a law that is very much in their favor because, in fact, all laws allow for some measure of control. The current system is the best way to control citizens abroad. "
Swiss Americans hit hard
The hunt for American overseas who are evading taxes has increased since the 2000s. These efforts have caused some collateral damage. Record fines were imposed on expatriate US citizens who had not declared and paid taxes.
Adding to the problem is new bank transparency legislation called FATCA [Foreign Account Compliance Act]. FATCA was introduced in 2010 and Swiss financial institutions have been complying with the law with since 2014. "Following the actions of UBS [which aided US citizens with tax evasion], the US Justice Department and the US government used the UBS case to give Switzerland a lesson and make an example out of Switzerland, "says lawyer David Forbes-Jaeger. The consequences of this were not long in coming for Americans living in our country. It has become more difficult for them to open bank accounts.
These various complications have prompted hundreds of dual nationals in Switzerland to give up their US passport in recent years. "I started making a list of my friends and acquaintances in Geneva who had given up," recounts Anne Hornung-Soukup. "When I arrived at 25 or 30 people, I stopped counting."
Patrick Le Fort with the collaboration of Philippe Revaz
Published Saturday at 21:22 - modified Sunday at 11:30
Translation: Marylouise Serrato