Secrets of Swiss Banking An Owner’s Manual to Quietly Building a Fortune Hoyt Barber John Wiley & Sons, Inc. ffirs.indd i 12/14/07 12:18:54 AM ffirs.indd iv 12/14/07 12:18:56 AM Secrets of Swiss Banking An Owner’s Manual to Quietly Building a Fortune Hoyt Barber John Wiley & Sons, Inc. ffirs.indd i 12/14/07 12:18:54 AM Copyright © 2008 by Hoyt Barber. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. 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HG3204.B355 2008 332.67'31—dc22 2007033364 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 ffirs.indd ii 12/14/07 12:18:55 AM To the individual quest for personal sovereignty and freedom One good investment is worth a lifetime of toil. — Investing for Profi ts by H. L. (Herbert Lee) Barber, 1917 Special thanks to Christian H. Kalin and associates at Henley & Partners AG and Hillary Lee Barber ffirs.indd iii 12/14/07 12:18:56 AM ffirs.indd iv 12/14/07 12:18:56 AM Contents Preface ix Chapter 1 Challenges and Threats 1 The Economic Front 3 Political Landscape 14 The Un-Patriotic Act 22 The New America 25 Personal Sovereignty and the Urgency to Act 27 Chapter 2 Switzerland—Alpine Financial Oasis 29 Roots of Political and Monetary Stability 30 The Swiss Reject the European Union 32 Armadillo-Tough Asset Protection 33 Twin Democratic Republics 34 Bankers to the World 35 Bank Secrecy in a World of Transparency 36 Cloak and Dagger 40 Swiss Franc 41 v ftoc.indd v 12/14/07 12:20:00 AM vi contents Chapter 3 Where to Begin: Opening a Swiss Bank Account 49 Types of Swiss Banks 53 How to Select a Swiss Bank 58 Types of Swiss Bank Accounts 62 Other Swiss Banking Facilities 70 Opening Your Swiss Bank Account 71 Online Banking 78 Written Instructions to Your Bank 79 Perfectly Legal Secret Account 80 Tax Evasion or Tax Fraud? 81 Worried about an Audit? 82 Chapter 4 Investing through Your Swiss Bank 85 Stocks and Bonds 87 Swiss Bank Bonds 88 Forward Contracts and Margin Accounts 89 Precious Metals 91 Foreign Currencies 105 Commodities 112 Warrants and Options 113 Mutual Funds and Electronic Traded Funds 114 Real Estate Investment Trusts 115 Real Estate 116 Your Own Private Monetary Policy 118 Chapter 5 Banking Policies and Regulations 127 Swiss Regulators 128 Financial Actions Task Force 130 Money Laundering 130 Qualifi ed Intermediaries 131 U.S. Taxpayer Requirements 133 Structuring 134 Tax Treaties 135 ftoc.indd vi 12/14/07 12:20:00 AM Contents vii Chapter 6 The Ultimate Investment Plan 137 Secrecy Factor 139 Investment Safety 140 World’s Best Asset Protection 140 Swiss Legal Proceedings 142 Swiss Franc 143 U.S. Tax and Reporting Requirements 144 Tax-Deferred Earnings 144 1035 Tax-Free Exchange 145 Swiss Taxes 145 Compound Earnings and Interest 145 Swiss Portfolio Bond 146 Swiss Annuity 147 Swiss Life Insurance 151 Blacked-Out, Forbidden, and Little-Known Investment Opportunities 153 Chapter 7 Alpine Retreat for Business and Pleasure 155 Business Practices 156 Travel 158 Tax-Advantaged Residency 161 Immigration 163 Swiss Real Estate 164 Swiss Real Estate Investment Companies 165 The Swiss Company 166 Doing Business in Switzerland 167 Back Door to Switzerland 169 Chapter 8 The Best Alternatives to Switzerland 171 T-7 Tax Havens 172 Liechtenstein 175 Andorra 176 Austria 177 Panama 178 Belize 179 Saint Kitts and Nevis 181 ftoc.indd vii 12/14/07 12:20:01 AM viii contents Tax Information Exchange Agreement 182 Mutual Legal Assistance Treaty 184 Appendix A Swiss Banks 189 Appendix B Other Swiss Service Companies 249 Appendix C Resources 257 Appendix D Suggested Reading 261 About the Author 265 Index 267 ftoc.indd viii 12/14/07 12:20:01 AM Preface witzerland. The word itself conjures up a multitude of images, nearly all S quite positive and most virtually in the realm of the magical, mythical, and too - good - to - be - true. And, really, is there any other single place on this increasingly sordid planet whose reality is so close to fan- tasy, and maybe even perfect? Switzerland is a breathtaking wonderland of majestic Alps vaulting to the sky, charming villages nestled down deep in the valleys, pristine lakes of profound clarity, and cities of such cleanli- ness, beauty, and order that it seems like some deity designed and built them. And then, well, there ’ s all that money! And what about all the fan- tastic things that such money can buy resting beautifully behind rows and rows of elegant shop windows . just amazing. And banks! How can there be so many banks? And is it true that these banks, located in this beautiful fairy tale of a country, actually con- tain and control almost 40 percent of the world ’ s private wealth? Yes? Wow. Well, how come ? Switzerland and the subject of Swiss banking have evolved over the past few decades, but the fabled ability of the Swiss banks to attract such incredible sums of money from all over the world has only increased ix fpref.indd ix 12/14/07 10:22:17 PM x preface over time, strengthening this little country ’ s position in the world. Why? Although Switzerland does sometimes seem almost perfect, and in many ways, it really is , this small nation, like most other countries, is a part of the real world, and like them, it is faced with its own set of challenges. But the fact remains that Switzerland has groomed itself to grow stronger and to remain independent in the face of global geopolitics, including pressures from the international bodies like European Union (EU) to join them and the negative efforts of the Organization for Economic Co - Operative Development (OECD), which tries to coerce Switzer- land ’s compliance and future to suit its specifi c agenda. Of course, the United States government would love to see Switzerland abolish its Bank Secrecy Act, or at least compromise it just a little so that offi cials could gain access to the activities and affairs in Switzerland of “ U.S. persons. ” But, alas, the government has been foiled at attempts to break Swiss secrecy for decades. And the EU has plenty of economically unstable nations crammed under the same umbrella with the richer eco- nomic engines of Germany and France. It would suit the EU well to have Switzerland thrown into the mix. Then it would stand a chance to force its will on Switzerland, and therefore the world in general, in a variety of ways. In fact, the mere act of joining the EU would homoge- nize Switzerland into a larger single economy, transforming its well- known individuality until the day there wouldn ’ t be any. Threatened for certain would be the famous bank secrecy, and the general discretion in related matters that have contributed over time to Switzerland ’ s profound economic success. The country would be blended into that massive eco- nomic block known as the EU and would serve to strengthen all the other members at its expense — fi rst, effectively zapping Swiss independ- ence and sovereignty, and second, dissolving the strong Swiss franc in favor of the euro. And when the EU fi nally does pass a proposed constitution — which could be as early as 2009 — all those nations, along with Switzerland, should it join, would be one big happy family.