Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Can the U.S. Tax Authorities Break Swiss Bank Secrecy?

Politics / Gold & Silver 2009 Mar 06, 2009 - 07:00 PM GMT

By: Julian_DW_Phillips

Politics Best Financial Markets Analysis ArticleIt would seem so clear that the U.SA. Tax Authority attack on UBS is going to break the Swiss secret banking system. Will they succeed? After whacking them with a $780 million fine they are now coming in for another attack demanding the exposure of U.S. Swiss account holders in the bank. They had agreed to disclose the names of 300 U.S. based clients with accounts with U.B.S. in the States. They have and will not agree to disclose the names of U.S. citizens who hold accounts in Switzerland . But the entire body of U.S. citizens holding Swiss bank accounts are worried about this prospect. On top of that, all other foreign Swiss bank account holders are worried too.

The entire Swiss banking system stands as a holder of countless secret bank accounts going not just globally but back through many, many decades of such holdings. Banking for foreigners is so important to the Swiss that they passed the Banking Secrecy Act that imposes serious prison time on those who disclose such secrets. So this is not just a battle between U.B.S. the multinational Swiss Bank, but the Swiss government and the U.S. Tax Authorities.

When the South African Reserve Bank decided to hold Swiss Bank investment from a popular equity issue in the country, unless the beneficial owners of the funds disclosed themselves, Fritz Leutweiler, the then President of the Swiss National Bank flew to see the South African Reserve Bank Governor and said to him, unless these funds were released to the investment or allowed to be repatriated, there would be no more Swiss investment in South Africa whatsoever. The funds were released that day.

In the States, the Tax Authorities think they have the Swiss on the run now and they know that U.B.S. bank executives are in an invidious position. But these executive know full well that they are within the laws of both countries, provided they maintain the secrecy of their clients with accounts in Switzerland [not in the U.S. though where the Swiss laws hold no Jurisdiction].

U.S. newspapers are painting a picture that the Swiss will be broken and that Swiss banking secrecy is tantamount to a crime for U.S. taxpayers. Indeed the charges being leveled against both the bank and U.S. citizens that hold accounts there are that they are evading U.S. Taxes. It is sad to see such reports and charges take such emotional lines that have departed from the realities of international law.

In short, the authority of the U.S. tax authority is limited to the borders of the U.S. and those tax payers living there . Yes, it is true that even U.S. citizens living overseas are required to submit a report of their worldwide assets annually to the Tax authorities, but the power of the U.S. remains limited to the U.S. shores even here and these citizens cannot be forced to pay those taxes until they return to the States, except on the assets within the U.S. No nation outside the U.S. will impose U.S. Tax laws in their country.

Two obstacles stand in the way of U.S. Tax officials imposing their will on U.S. citizens in this regard. The first is Jurisdiction and the second is the reality of a legal entity .


It is the real experience of the author , not the academic theory, that Jurisdiction is paramount. Some real experiences will illustrate this.

Should a citizen of the U.S. be charged with tax evasion [not simply suspicion of tax evasion] in a foreign land, it is incumbent on every court to establish the correct Jurisdiction before proceeding with any court case. Should it be found that the court does not have the jurisdiction to impose any finding in a foreign jurisdiction the case will be dismissed. For instance, a German suing an Englishman in Sweden , for a matter taking place in Germany would have the case referred to the German courts as the Swedish court does not have the power to adjudicate on the matter. Taking this to an extreme, The President of Zimbabwe can starve his own people and no court other than the Zimbabwean courts can try him except the International Court of the Hague.

In this case, the laws of Switzerland govern the activities of the U.B.S. in Switzerland . U.B.S. activities in the U.S.A. are governed by U.S. law, but should those activities be Swiss based then the U.S. has no power to impose U.S. law in Switzerland . They can accuse Swiss officials in the U.S. as much as they like, but their jurisdiction applies only to activities inside the U.S.A . Any U.S. citizen that donated assets to a Swiss legal entity must report it to the U.S. Tax authorities [[Donation Tax will apply?], but any money made on the entity in Switzerland thereafter in the foreign legal entity is outside the scope of the U.S. Tax jurisdiction and this will come out in the present attack on the U.B.S. Under Swiss law, any U.S. citizens, against whom there is substantive evidence of a crime involving the money invested in Switzerland , the Swiss Authorities will cooperate with the U.S. authorities in passing it back to the U.S. and in its criminal investigation. However, Switzerland does not regard simple Tax Evasion as a crime!

For some reason President Sarkozy of France has cast his stone at the Swiss [he appears to like the stage] and suggested that Switzerland be added to a blacklist of Tax havens. He would not do this if he believed that the Swiss could be broken by the U.S. Tax Authorities.

In the seventies the Bank of England wanted to explore the Swiss based activities of certain British citizens and sent a detective to Switzerland to investigate. This official was promptly locked up for breaching Swiss banking secrecy laws. The same would happen to a U.S. Tax Official. Perhaps we will see this happen?

Taken further, any U.B.S. official who passes bank account details of U.S. citizens against whom there is no [Swiss agreed] tax evasion evidence to U.S. Tax authorities would likely be imprisoned on his return to Switzerland.

Legal Entities

A foreign legal entity is under the Jurisdiction of the country in which it is formed. No outside Tax authority can impose taxes on it. If the entity carries on legal business what should happen is that any cash flow from that entity to the originator in a foreign land has the right to impose taxes on the repatriation of that cash flow. What also happens in some countries is that where a Tax Authority deems the entity to be placed in the foreign location solely to avoid taxes it can impose anti-avoidance taxes on the flow of cash and tax it as though there were no legal entity there in the first place. But the cash flow has to come home first. That taxation is then imposed on the individual or entity originating the foreign entity but in the country of origin. The Tax Authorities cannot step over into the foreign jurisdiction and impose their laws there!

Important Notice:

We at Gold and Silver Forecaster are now finalizing discussions with a leading UK Fund to set up a Fund holding bullion within a Jurisdiction outside the reach of all the global money Authorities, except the one with an established reputation of preventing governments and their agencies from interfering with client's assets [except where criminal activities are involved]. The fund will be designed to protect investors from such executive orders and safeguard bullion holdings for the client alone.

We ask Subscribers who would like to make an investment in this fund, either by moving their current gold holdings or invest in the shares of this gold Exchange Traded Fund [with this vital protection] to let us know the quantity of gold they may move? Please e-mail us at: with the potential gold investment figure. Of course, this will still be subject to your approval of the final fund and its details.

Evasion & Avoidance

Many individuals and corporate structures are set up in a way so as to avoid taxes. This is vastly different to evading taxes. Avoidance is ensuring that taxes are not due, whereas evading [in most countries] is criminally ducking taxes due. One is within the laws of the U.S. the other is outside it. The chest beating of the U.S. Taxman seems to be obscuring that difference. But nevertheless the difference is clear. The U.S. has often barked about “Dummy Corporations” in foreign Jurisdictions but a corporation is a legal entity or it is not. It is governed by the laws of the Jurisdiction it is in. The concept of a “Dummy Corporation” implies tax evasion in the U.S. but not elsewhere. Its existence, in reality, may well facilitate tax avoidance only. Even there, the U.S. Tax Authorities must establish evidence of Tax evasion and gather evidence to confirm it. Where it is legally permissible corporations set up primarily to minimize tax can be simply a re-routing of cash flow in such a way as to avoid or postpone taxes. The important feature of this is that the letter of the law is obeyed. However, in many cases the Taxman is shouting about the ‘spirit of the law', which may be different. It is comforting to realize that even the U.S. Taxman has to obey the letter of the law !

It appears that U.B.S. paid the huge fine primarily to pacify these authorities so they could continue business within the U.S. and did not admit to Tax Evasion support. If they did support such in the U.S. then we are sure that the executives concerned will be hung out to dry by their own people. Swiss bankers are extremely precise and in the U.S. they would also obey the laws of the U.S. What is tragic is that at the end of the day, U.B.S. may well depart the shores of the U.S. battered and bruised but with its Swiss secrets intact. Switzerland has been a haven for money by all types of individuals for the last 400 years. It is perhaps the main commercial activity in Switzerland . This service has gone hand in hand with the neutrality of Switzerland a policy guarded by nearly all Swiss citizens. They are unlikely to change these laws because of the huffing and puffing of U.S. Tax officials.

As this goes to print we have just received the news that the Obama administration is not interested in escalating a dispute between the United States and Switzerland over bank secrecy laws. The tensions have been rising and led to a meeting between Switzerland 's top Justice official and her counterparts from the U.S. Justice Department.

Jurisdiction rules!

Gold Forecaster regularly covers all fundamental and Technical aspects of the gold price in the weekly newsletter. To subscribe, please visit

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2009 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules