FATCA has applied worldwide since 2014. For Swiss financial institutions it means identifying US persons among clients and reporting their accounts. Anyone with US citizens in a family structure knows the consequences: extra forms, restricted product choice and sometimes banks that no longer accept such clients at all.
Model 2 today
Under the current Model 2, Swiss financial institutions report account data directly to the US tax authority with the US clients’ consent. Without consent, the US must request the data via administrative assistance. Conversely, no account data flows from the US to Switzerland.
The switch to Model 1
With the agreement of 27 June 2024, Switzerland moves to Model 1: the tax authorities of both countries exchange account information automatically and reciprocally, as Switzerland already does with other states under AEOI. Swiss financial institutions will then report to the Swiss Federal Tax Administration instead of directly to the US. According to current planning, the switch takes effect on 1 January 2027.
What it means in practice
For banks and reporting institutions, the reporting channel and procedures change. For fiduciaries, trusts and family structures with a US connection the basic question remains: who is a US person and how are entities classified? Anyone administering structures with US beneficiaries should review the classification before 2027. Institutions use self-certifications and US tax forms to establish US status.