Last week’s piece in Le News on US double taxation and the growing number of Americans relinquishing their citizenship has produced different reactions. These range from “exaggeration” by those who say complaining Americans are simply those who wish to “hide” their assets to “sadness” that US nationals should be obliged to hand over their passports in order not to be harassed. Then there is anger at those US politicians, particularly Tea Party zealots, who wish to punish Americans who dare live in places like Switzerland or France rather than the “homeland”.
Others, including middle class Americans struggling with a low dollar and the high cost of living in Switzerland, maintain that the best solution is to declare what you think you can get away with – and hope for the best. Those who have played by the rules, they argue, have only managed to make their lives miserable with complicated procedures, unexpected (double) back taxes, abusive fines or costly capital gains charges in addition to what they have had to pay to local authorities.
One is hearing similar concerns among Swiss and other foreigners, including North American and EU citizens, who have opted to live across the border. Given threats by Paris to tax any resident with assets abroad or personal wealth – a house, a painting or a sailboat – worth over one million Euros, people are wondering whether it is still worth remaining there. Or even to set up a business on French soil. Young French with a flair for making money are increasingly crossing into Switzerland with their ideas or moving to London, Shanghai or Los Angeles.
The fear is that even if you are not affected by France’s new rules, your children will be when it comes time to inherit. Any property in Switzerland is liable to be taxed by the French, regardless where it is located. (The Swiss cantons have yet to agree to this).
An estimated 15,000 Swiss are reported to be living ‘illegally’ in neighbouring France, that is, claiming to be resident in Geneva or Vaud but actually residing across the frontier. The French authorities have declared war on these ‘faux’ residents causing many to think twice. French customs officials often ask if one has a place in Switzerland, and how many rooms compared to one’s supposed “secondary” residence in France. If the Swiss place is bigger, you may be accused of living illegally on the French side. The fact that a two-room flat in Geneva or Lausanne might cost more than a six-room place in France does not seem to come into consideration.
One village in the Pays de Gex currently has 84 houses or apartments for sale, many of them owned by Swiss who are now moving back across the border. Less than two years ago, it was almost impossible to buy anything.
For those small entrepreneurs, who wish to set up in France, it is also becoming a nightmare. One local businessman, whose family has been living in the same village for three generations, said that he is now moving his business to Geneva. It is simply not worth operating in France, he complained. The government taxes you at every move, or imposes an administrative bureaucracy that cripples you from the start.
The problem is that not even the French tax or property lawyers really know what’s going on in Paris. The rules seem to change by the day. Maybe the new business to get into is to become a tax advisor, particularly one who can fathom Swiss, French and American procedures, mused one American friend with a French wife living in France but working in Geneva.
So given all this, it is interesting to note a story in this week’s International New York Times that, despite all the pressure from the United States – and the European Union – it is very much business as usual in the Swiss banking world. Bankers who cooperate with foreign officials and violate their “duty of absolute silence,” the article maintained, potentially face home raids, prison, fines for secrecy violations and industrial espionage, and the ostracism of colleagues and friends.
Furthermore, Swiss seem to be getting fed up with efforts by foreign governments to undermine this traditional secrecy. The right-wing Swiss People’s Party (UDC) is rapidly gaining enough signatures for a voter referendum that will basically tell Washington, Paris and others that they can take a hike when it comes to demands for tax information. Those Americans, French and other foreigners suffering punitive double taxation are the very foreigners the anti-immigration Swiss dislike. Ironically they may now consider the UDC their new allies.
