JT: So tell me how it started. How and why did you open a Swiss Bank account?
AB: I had a small business running an office in Eastern Europe, and traveled through Zurich a lot. I liked stopping there, and would wander around downtown during layovers. Zurich is so civilized after places without running water and electricity. I saw that things were not looking good for the dollar, and that the EU had a strong money policy. So, I decided that I should hedge that by getting an account denominated in Euros. I was also worried, after 9-11, that something radical could happen and the dollar could move fast making it very hard to fulfill my obligations to my staff to even shut down properly. I opened a personal account because I didn’t have my corporation papers with me, and it didn’t really matter because it was an S corp.
JT: Hmm. You don’t mention taxes. We are anonymous, but part of our agreement is that you lay it out without prettying anything up. So tell me truthfully, what role did tax evasion have in your decision? It had to play some role.
AB: Oh, I thought about it of course. You go in the little white room with them and they tell you that you can get a numbered account or a named account and you think, “Numbered account. Like Jason Bourne.” But it really wasn’t part of my decision, if anything it worked against it because I don’t like people to think things like that about me. It was kind of embarrassing really. Some people like to talk about their Swiss bank account. I never did. Only one other person knows I have one besides you.
JT: Nothing at all to do with it? Nothing to do with taxes? Seriously?
AB: Not really. Look, have you ever tried to get a Euro denominated account at a bank in the USA? I found one bank after a while, Everbank, and the info on them said they were a terrible bank, just awful. I needed something to hedge on the dollar going down. And down it [the dollar] went. By the time 2008 rolled around that account had roughly doubled in value when expressed as dollars.
JT: What kind of account did you get?
AB: I got a named account. What do I need with losing the account number? Things happen sometimes. Named account is one less thing to worry about.
JT: Ok. So tell us what it was like having your account. How did it work?
AB: Well, it was pretty simple, except that you couldn’t get balance information or statements. They won’t send out statements except to non-USA addresses. Used to be they wouldn’t even take phone calls from the USA. Now they do, but it was a little tricky getting the phone numbers of people inside the bank. It was kind of an accident, and I don’t think they are supposed to, but once they called me. After that, I could call them. I had to get my statements while visiting Zurich, if I wanted to bother. The first one, I was kind of shocked. The account went down by 6%.
JT: Went down? Shouldn’t you have gotten some sort of interest rate?
AB: I chose to put part of it into Euros and the rest into Euro denominated stock portfolio that they would manage. That’s why it went down. So I told the guy, Yann, that I wanted everything put into a simple savings account in Euros. He said ok. The rate was something like 1.5% or less. It varied. Really low.
JT: How much was this that you put away?
AB: That’s why I went with UBS AG. UBS was the only bank that would open an account for an American for less than $500,000 or more. I was a small fry business, so when I walked from bank to bank asking them what their minimums were, and UBS said “$35,000 swiss francs” I went with them. I ended up putting some $70,000 of the company’s money into that account. I paid taxes on it all as retained earnings before sending it over. I didn’t have $500,000.
JT: That doesn’t sound like that much. So how much do you owe in taxes on it?
AB: Right now? It’s hard to say exactly, but it’s not much. Since it is held in Euros, the rise in value because of currency trade doesn’t come into effect until I turn it into dollars again. I can buy stuff in Euros and that’s not a capital gain. So what I owe is the interest paid in Euros. That interest totals a few thousand, tops, and I haven’t taken into account the initial 6% drop in value.
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