Switzerland to Revise FATCA Information Exchange Agreement with the U.S.

When KC Global designs structures for high-net-worth individuals and businesses, it not only considers international tax implications but also prioritizes privacy. The purpose of maintaining privacy is often not to evade taxes but to legally protect business operations and assets for various reasons. However, in an era of increasing global transparency and rapidly advancing AI technology, privacy, like international tax compliance, requires regular updates and refinements to ensure its effectiveness. In this article, we explore how regulatory changes can impact the privacy strategies initially put in place.

Historically, many high-net-worth individuals chose to park their assets in Switzerland, primarily due to its strict banking secrecy laws, which prohibited banks from disclosing information to foreign or even domestic tax authorities. However, since Switzerland signed agreements such as FATCA with the U.S. in 2014, banking secrecy has lost much of its invincibility. Assets held by Americans in Swiss banks can now be reported back to the U.S. through FATCA (albeit with some loopholes). That said, these assets remain protected under Swiss banking secrecy laws, meaning that unless Americans voluntarily report their holdings, Swiss tax authorities may remain unaware of their presence in Swiss banks.