The Swiss are likely to vote to overturn a FATCA agreement with the US Treasury Department, which has recently been ratified by Parliament. On October 8, a STOP-FATCA referendum committee has been set up, amid skepticism and fears of US reaction. Direct link to access the referendum is here
[Note: FATCA (Foreign Account Tax Compliance Act) is a law requiring Swiss Banks to transmit the financial data of US expatriates, as well as many Swiss citizens, to the IRS. Original French (translated by Victoria Ferauge): Money & Finance “FATCA: un référendum pour briser la peur”]
There is an atmosphere of vague fears, mostly half-formulated and at best half-expressed: such as losing access to the American market or even reprisals against Swiss corporations. These fears have gone to the point of leading the Swiss Parliament to accept an Intergovernmental Agreement (IGA) with the US, which will not bring any benefit to the country other than averting retaliation.
Once started, however, a citizens’ referendum follows its own momentum. “Speculations about a Swiss referendum against FATCA had been a matter of international buzz on the Internet, already three days before it was actually launched,” said Laurent Franceschetti, a banking management consultant at SettleNext. He reckoned that the best allies of the Swiss referendum abroad might be found in the United States, where James George Jatras and his web site RepealFatca.com are following the gathering of signatures with a mixture of joy and hope. If the referendum committee manages to gather 50’000 signatures by January 16, the Swiss people will be called on to vote on the matter in the course of the first half of 2014.
FATCA opponents calculate that the Swiss referendum may slow down, where still possible, the process of IGA signing [Inter-Governmental Agreements] started by the US Treasury. But it seems to have slowed down anyway: since the agreement with Germany on May 31, no new IGAs have been signed. Admittedly, France’s IGA had been on the agenda for French Finance Minister Pierre Moscovici, when he was visiting the US in October 10-12 [but the signature meeting had to be called off because of the partial shutdown]. Without counting France, the Department of Treasury has scored only 9 IGAs so far.
Considering that at least thirty IGAs would be needed, in as many countries, in order for FATCA to be a success, it appears that the Department of Treasury is still far off the mark. One major country, China, has apparently declined to go along the road to an IGA.
“FINMA Will Enforce U.S. Law”
Closer to Switzerland, Austria does not hide its skepticism about FATCA, according to Philippe Nantermod, PLR/FDP [liberal-radical] representative in the Parliament of the Swiss State of Valais [the Swiss Canton where the Matterhorn is located]. He had first to give up his project of ??launching a referendum because the PLR/FDP youth, at Swiss Federal level, had refused to back him up last June. But he is striking back, thanks to the fact that the referendum has taken off anyway, under the auspices of the Ligue Vaudoise and with a more decentralized structure. He is still confident to win over the general assembly of the PLR/FDP youth, at a meeting due to take place in Berne on November 2.
In the meantime, the vice-president of Swiss PLR youth, Alain Illi, has already committed his personal support in favor of the committee overseeing the referendum. And Philippe Nantermod stated that the PLR/FDP youth of Valais will set up stands in the streets to collect citizens’ signatures.
The arguments in favor of the referendum are miscellaneous. For defenders of Swiss sovereignty, notably the Ligue Vaudoise [a Lausanne-based conservative association] but also the Lobby des citoyens of Marc Studer, as well as for Yves Nidegger [a VOP (conservative) federal MP], Switzerland should not set a precedent. And Philippe Nantermod pointed out that the Swiss’ taking up US tax law, including its updates, will set a precedent that the European Union will invoke to its advantage in the future.
As for the Parti Pirate, involved from the beginning in the referendum committee, it insists on the protection of privacy. And it has a point: data collected under FATCA will be spread throughout the many US government agencies. “Tomorrow FINMA [the Swiss banking regulation authority] will enforce US law, including its future evolutions – as when banks will be required to turn in the names of their employees, ” said Philippe Nantermod.
Banks Are Implementing FATCA
To this progressive nature of the FATCA agreement, supporters have few arguments to oppose except legal security, but this is failing to strike a chord. A possibly better argument, is that banks have already started to implement FATCA and that they will continue to do so, with or without referendum. While this is a reality resulting from the sheer weight of the US, it remains unclear why Switzerland should necessarily legalize this state of affairs, with the added risk of making it a legal precedent.
Even so, it is not certain that Swiss banks will apply FATCA for long, as it is doubtful that this American law will be implemented at all, unless a vast majority of countries accepts to participate – if anything because the costs are unsustainable: up to 3 billion dollars for the United Kingdom, according to an official estimate and perhaps 1 billion in Switzerland (although to date there are no reliable figures). All this in order to net $892 million for the IRS if the whole world were to play the game, which very likely it will not.
In the unlikely event that Swiss banks put up a fight, there is doubt that the United States would be in a position to put their threats into action. “If Swiss banks were barred from using US dollar transactions, then the commodity trading business in Switzerland would be disturbed; this might give even more arguments to those who are currently campaigning for the replacement of the Dollar with the Euro in international trade” says Laurent Franceschetti. As the American saying goes, the US Treasury Department would end up shooting itself in the foot.
Link to original posting on IBS regarding the referendum.