About taxes

US income tax

The assets managed by a Swiss SEC RIA and held with a Swiss custodian bank need to be adequately reported, with income taxes due, filed and paid.

Swiss taxes

There are no Swiss income taxes for non-resident foreign nationals, maintaining a bank account in Switzerland, except if you own a Swiss Franc account, then the 35% Swiss withholding tax applies on the interest accrued in the account and this amount is automatically debited by the custodian bank annually. Depending on your particular investment and if you are a resident of Switzerland or not, there are various other taxes such as stamp taxes, securities transfer taxes, VAT etc.

Double-tax treaty

Due to the double-tax treaty between Switzerland and the US, a portion of the Swiss withholding tax can be reclaimed. To avoid this tax, you can denominate your account in a foreign currency such as EUR or USD.

You will need to provide a Form W-9 Request for Taxpayer Identification Number and Certification which is to be given to the Swiss SEC RIA as part of the custodian bank account opening process (you do not need to send it to the IRS).

Tax-deferral

Unlike a bank account, taxes may be deferred with a legal and US tax-compliant insurance company-based solution from an insurance company in an appropriate jurisdiction.

With the appropriate kind of Deferred Variable Annuity or Private Placement Life Insurance policy, the investment options for the policy's underlying investment portfolio are not restricted and when investing in foreign hedge funds for example, you are not subject to the onerous PFIC taxes as you otherwise would be. The policy's underlying investment portfolio without investment restrictions can be managed by a Swiss SEC RIA, if designated to do so (or other designated asset manager).

Professional advice on taxes, based in Switzerland

As taxes can be a complex matter you want to make sure you get it right, avoiding any unpleasant surprises in the future. You should consult an experienced tax professional, but perhaps your US tax expert is not well-versed in the tax consequences of your Swiss bank account.

There are several US tax experts based in Switzerland which have experience in the tax issues of American taxpayers living in the US and abroad. Find your Swiss-based US tax expert here.

Where Americans are Welcome is not in the position to provide US tax advice or suggestions and you must consult with a qualified tax expert.
Where Americans are Welcome is independent and unbiased and does not recommend, prefer, endorse, solicit or discourage any particular listed Swiss SEC RIA, other service provider or wealth management-related product. Furthermore, the website content, opinions, privacy policies or services provided are their own and are not endorsed by WAAW in any way.
DVA PPLI:While it is legal for an American to purchase a policy from a foreign insurance company, this must be done so from outside United States jurisdiction. Foreign insurance companies, their products and the brokers that work with them are not registered in the United States with the SEC or the US State insurance commissioners and they may not promote or market the policies on American soil. The information provided here is of generic nature as it relates to American investors and is for informational purposes only. It does not constitute the promotion or solicitation of any insurance company, product or broker. Please read the disclaimer