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How to Protect Assets with a Swiss Bank Account

UPDATED: February 20, 2013

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It is widely believed that Swiss bank accounts are only for the very wealthy. In reality, Swiss bank accounts are not just for millionaires, criminals or government officials trying to hide illegally obtained wealth, or people trying to keep assets from the hands of a former spouse. Almost anyone with as little as $5,000 can open an account in Switzerland. And it is perfectly legal to do so. So the question is, why would a person want to go to the trouble?

Why Switzerland?

Swiss neutrality and national sovereignty, long recognized by foreign nations, have fostered a stable environment in which the banking sector has been able to develop and thrive. There is an important difference between bank accounts in the United States and those in Switzerland in terms of privacy. If the aim is asset protection and security, Switzerland has advantages over the United States. In fact, people who live in countries with unstable governments and banks in particular often turn to Swiss banks because of their banking security and privacy laws.

In Switzerland, if a banker divulges information about a bank account, even the existence of the account, without permission from the account holder, immediate prosecution is begun by the Swiss public attorney. Bankers face up to six months in prison and a fine of up to 50,000 Swiss francs. Additionally, the account holder has the option of suing the bank for damages. Needless to say, Swiss banks are very careful about privacy.

Swiss Bank Account Privacy

Swiss banker requirements of client confidentiality come from a law that came into effect in 1934. It stipulates that "anyone acting in his/her capacity as a member of a banking body, as a bank employee, agent, liquidator or auditor, as an observer of the Swiss Federal Banking Commission (SFBC), or as a member of a body or an employee belonging to an accredited auditing institution, is not permitted to divulge information entrusted to him/her or of which he/she has been apprised because of his/her position."

Of course there are some noteworthy exceptions, such as drug trafficking, insider trading and organized crime. But there must be a substantial criminal allegation before a governmental agency, especially a foreign one, can gain access to account information.

According to the Swiss Bankers’ Association website, there is a duty for bankers to provide information under the following circumstances:

  • Civil proceedings (such as inheritance or divorce);
  • Debt recovery and bankruptcies;
  • Criminal proceedings (money laundering, association with a criminal organization, theft, tax fraud, blackmail, etc.).

Income Tax on Swiss Bank Accounts

Interest earned in a foreign account is taxable under present U.S. tax law, and income taxes must still be paid on those accounts. Switzerland has, in recent years, facilitated more effective tax information exchanges between the two countries. There are no capital gains taxes deducted at the source by Swiss banks in Switzerland, but account holders need to file tax returns in their country of residence and must include all capital gains/losses and income and expenses, even if earned offshore. The IRS strongly enforces this and there are no exceptions.

Can Creditors Ever Access Swiss Bank Accounts?

If an individual is looking for a way to protect their hard-earned assets from becoming fair game to creditors, a Swiss account can be the ideal solution. The main reason for having such an account for most people has to do with keeping their financial status a secret, and protecting their assets from attack. No private citizen, or his or her legal representative, can ever receive any type of information about another person's Swiss bank account.

Unlike American law where law enforcement agencies, the judicial system and private citizens can gain access to all kinds of financial information, under Swiss law, except for extraordinary circumstances as outlined above, neither the bank’s officers or employees are allowed to reveal any information relative to any account to anyone, including the Swiss government. It is next to impossible for private investigators, attorneys, family members, business associates, etc., to find out anything about another person's financial affairs.

Consult a Financial Expert

If a Swiss bank account is of interest to you, contact a financial expert who is well-versed in setting up such accounts for assistance and advice.

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