Swiss Banking Guide

Introduction

Swiss Banking
Swiss banks are world-renowned for their secretive nature and protection of clients. Swiss banks generally have higher confidentiality than other banks, based on Swiss bank law, which regulates what information the banks can give out. In general, there is no way to trace the source of money placed on deposit with a Swiss bank; they do not routinely confirm whether a named person holds an account or not.

Due to international pressure, Switzerland has recently lowered the restrictions, and allowed international police information about suspected criminals.

There are about 400 banks in Switzerland, ranging from the "Two Big Banks" down to small banks serving the needs of a single community or a few special clients. The Two Big Banks, namely Credit Suisse and UBS , have extensive branch networks both throughout Switzerland and in many international centers. Banks are licensed by the Swiss Federal Government through its Banking Commission, and may operate throughout the country. A number also have offices or other representation in foreign countries.

The Swiss banks have a long reputation for managing investment portfolios for their clients, and providing other services such as estate planning, wealth management, trust companies, etc., for individual customers.


Swiss Bank Secrecy
Swiss bankers are under obligation to keep any information about you or your account strictly confidential. This bank secrecy is among the strictest in the world and stems from an age-old historical tradition. It is established in Swiss law. The banking act adds a special section (introduced in 1934, in order to protect accounts of Germans, especially German Jews, from Nazi confiscation) which makes it a criminal offense, with the possibility of an individual going to jail, for the bank or its employee or agent to improperly divulge any confidential information

The only exceptions to this rule concern serious crimes such as gun smuggling and drug trafficking.

Bank secrecy is not lifted for tax evasion.

This is because failure to report income or assets is not considered a crime in Switzerland. As such, neither the Swiss government, nor any other government, can obtain information about your bank account.

They must first convince a Swiss judge that you have committed a serious crime punishable by the Swiss Penal Code.

Bank secrecy will not be lifted for private matters such as inheritance or divorce if you have kept your banking information strictly confidential. It is up to plaintiffs to prove that the account exists if they wish the judge to pursue the case. In this respect, the numbered account provides the maximum degree of confidentiality.

Switzerland - The motherland of banking



When comes to safety for your money, there is no other country in the world better than switzerland. Supporting this fact, the solid reasons are .......

World's foremost financial center

Politically and economically stable country. Switzerland has not been at war with another country since 1505 . The foreign policy of switzerland is neutral and balanced. No perceived threats of war, escalating to political instability, violence, financial crisis and terrrorist attacks on switzerland. If you have read history, it even survived in two big world wars, World War I and World War II too.

More than 150 years of traditional swiss banking, that too not just simply banking, a world class and quality banking.

Switzerland is not a part of European Union and never wanted to join european union.

The currency of switzerland is ' CHF Francs ' expands to 'Confederation Helvetica Francs' or generally swiss francs.

More than 30% of the world's wealth are being held at bank accounts in switzerland.

Privacy in money related matters, protected by bank secrecy laws.

CHF francs, is the world's most premier and stable currency and fully backed by real gold bars.

Scenic beauty of alpes mountains, a popular tourist destination spot.

Swiss chocolates, a must to taste :)

One of the main reason why many people prefer switzerland compared to other offshore zones, is the safety of their deposited money. The two main factors to be considered is the countries economic trend, and political scenario.

Switzerland, excels in these and further more a proven record of the 150 years of swiss tradition in banking.

What is the concept of 'Offshore' and 'Onshore'?

Explaining these two terms is that simple!

'Onshore' derives its meaning from itself. 'On' + 'Shore' refers to some activity, where you live or domiciled. Similarly 'Offshore' deriving from 'off' + 'shore' refers to some activity 'out' of where you live or domiciled. You might have heard of 'offshore jobs' and 'onshore jobs' which is an intuitive example.

Let us extend this terminology to bank accounts. Let us consider that you are a U.S citizen and you own your personal savings account in Citibank. This is your onshore native account. If you often travel and do business in canada, there will be a need for you, to open your bank account in canada. Since you are US citizen, your canadian bank account gets offshore status.

'Offshore bank account' is the name given to the bank accounts that are held by non-residents in any foreign country.

The main advantage is the bank account owned by the customer is held 100% private and confidential, for which bank secrecy laws apply, in the country where the bank is located.

Your friends, spouses, tax authorities, personal enemies, investigators, detectives and your government can never have access of your financial records held in offshore.

Very importantly, offshore accounts are tax free, no capital gains, attractive investments, and direct access to the trade markets.

Here are some of the common famous Offshore Zones : Switzerland, Austria, Latvia, Leichenstein, Cyprus, Bahamas, Cayman Islands, Belize, Costa Rica, Panama, Dominica, British Virigin Islands, Isle of Man, Cyprus, Mauritius, Singapore, HongKong, and Cook Islands.

These places are notoriously called 'Tax havens of the World' because they offer significant tax benefits like no income taxes, no estate taxes, no capital gains, excellent interest rates for investments, direct access to stock markets.

Switzerland is the undisputed leader in offshore. Neverthless, privacy is a biggest attraction in these 'Tax Free Zones' of the world.

Taxes in switzerland for non residents

Non-residents bank accounts in switzerland are completly tax-free. This means, there are no income taxes, no capital gain taxes, no real estate taxes, no inheritance taxes plus a bonus of your privacy.

Swiss residents are subjected to income and net wealth taxes. Non-residents as long as you do not derive any income inside switzerland, you are free from swiss taxes. Some of the examples which bind you for swiss taxes are
Real Estate Income
Income from business establishments in switzerland
Interest on mortgages
Pensions relating to former employment in switzerland

There is a special tax called WITHOLDING TAX (35%) levied on dividends, bank loans, and certain insurance payments. If you live in foreign country, and you get interest from the bank deposits, then this tax is levied on you. Note that, only your 35% of interest gained from deposits is subjected to withholding tax and not your capital. This is because you are generating money inside switzerland. However royalties, swiss annuities are fully exempted from swiss witholding taxes.

More tax related information can be found on this website http://www.taxation.ch

'Tax evasion' is a serious crime considered in many countries. It all depends on how properly you plan your taxes. 'Tax Avoidance' , 'Tax Evasion', 'Tax cuts' are very different terms, have different meanings with one another. 'Tax avoidance' is perfectly legal, while 'evasion' is a crime. Tax laws vary from country to country and laws are subjected to change anytime. We highly recommend you to consult and ask advice from tax authrorities or attorneys, before you properly structure tax planning. It is very important that you use your offshore bank accounts for legitimate purposes. It is fully LEGAL to own your private bank account.

If you are a U.S citizen, the IRS will ask you to file Treasury Form 90.22.1, if you own a offshore or foreign bank account. You might need to report to IRS if your foreign bank account value is more than 10'000 USD annually.

Also as per new IRS code, there is no need to report your swiss annuities. If you fail to report your account to IRS it may constitute 'tax evasion' which is a serious crime.

There is no need to file this form if your savings in foreign account is less than US$10'000 annually.

There is no harm in honestly honestly filing your taxes to IRS. You might also be aware that any attempt to defeat taxes constitutes a crime. You may wonder if IRS might conduct an audit to your foreign account.

Well, to speak the truth, IRS is on hunt to people who DONT report their foreign account, than people who report it honestly. More information is available on I.R.S Website.

Privacy in Switzerland

Privacy is the fundamental right to any citizen, very importantly greatly demanded in money matters. It may not be available in your country, but many countries in europe, like austria, latvia, and switzerland well respect privacy in money related matters. This is not limited to local country people and holds true even for non residents.

Many people demand privacy for their money from personal enemies, business rivals, liens, lawsuits which plays an important decisive role both now, and importantly in later part of one's life. Safe guarding ones hard earned assets, will be the primary importance for anybody. Think about business failures, unemployment, retirement, losing lawsuits!. These disasters could be big nightmares. One proverb says "It is always not too late to correct your mistakes" but do it before it is too late. You may not know the future!!

When i was a small boy, once i hear from TV news, or from newspaper about somebody caught with swiss bank account, i panic. I wonder how rich and royal class people are they! Not only me, almost many people would fear of somebody having swiss accounts and think that these accounts are only for elite, corrupts, politicians, terrorists, kings etc. These old cliches got deep rooted in the minds of many people. Still seems to have not faded.

The reality is anybody whosoever may be it is, worker or a king or you , will look into the way of protected your money and safeguarding your assets. Financial privacy from your friends, relatives, family members and other third persons will be an inevitable one.

In recent years, swiss banks welcome all foreign people and bank accounts had become so cheap and can be affordable by any ordinary person. Gone all old proverbs and myths of swiss bank accounts. Many banks in switzerland demand no minimum balance or account maintenance fee with your account. Opening your swiss account could be the easiest ever imagined compared to the bank next to your house. You can just simply open your swiss account, and keep $1 for years. No questions asked. Very importantly, your money in swiss savings account, does grow with interest. Though the interest rates are not very lucrative, but safety is guaranteed.

Say, if you often travel worldwide, or you are a student, you want to bank transfer your money to your friend or a business, your local bank charges would be as high as $50 per transfer even for a small amount. Crediting your cheque take hell a lot of time with your country bank. But bank transfers with your swiss bank, costs $0 for < $50 transfer, costs $5 for amount <$200 transfer and $20 for $2000 or more. See the advantage. Also, these all can be done with internet banking, just with a click you can issue checks, receive money through Western Union and more. Crediting your cheks, should not take no more than 3 days. See the advantage. That is why often called, a world class banking. You will have your separate account manager assigned to you, even if you hold $1 in your account.

Bank secrecy in Switzerland

Swiss banks and their staff are obligated to keep all data, documents, all sorts of relationships beteen bank and client, strictly private and confidential and are bound to respect clients private matters. The obligation to maintain banking secrecy applies to all those who are employed by or are members of any part of a bank, as well as to its auditors and the members of its board of directors. It continues even after termination of their employment (Federal Law on Banks and Savings Banks of 8 November 1934, Article 47). Any banker who divilges the private records of his client, or a third party, may face a jail sentence or be fined. Confidentiality is not, and has never been, absolute because it does not protect criminals. Swiss banks consider it to be of paramount importance for their financial centre to be free of criminal activities. One of the experts quoted saying that 'they wanted cleanest money in their banks'

Article 47 of the Federal Law on Banks and Savings Banks, was enacted on 8 November 1934. This article prohibits anyone who functions as an officer, employee, mandatory, liquidator or commissioner of a bank, as a representative of the Federal Banking Commission, or as an officer or employee of a recognized auditing company, from disclosing any information that a bank customer entrusts to them in this capacity. Article 273 of Swiss Penal Code punishes responsible persons of breaking the law. The convicted persons may face a jail sentence or fine upto CHF 30'000 CHF or both. The violation of bank customer confidentiality remains punishable even after the termination of the official or employment relationship or the exercise of the profession (Art. 47, Federal Law on Banks and Savings Banks).


Criminal Activities

Bank secrecy laws cannot be exploited and are NOT meant to shield criminals and criminial activities.

Swiss authorities are increasingly cooperating with other International world countries to combat terrorism, drug trafficking, weapons smuggling, trafficking of women and children etc... Bank secrecy can be easily lifted, without the knowledge of the client by direct judicial orders. The swiss judge may request the clients records from the respective swiss bank, if the client is found to be involved in illegal criminal activities. Banking secrecy is not waived in cases of tax evasion (such as the mere non-declaration of income or assets). However, tax fraud (false invoices, false accounting, etc.) are criminal offenses. Whether they are committed in Switzerland or abroad, the judge trying the case has the right to obtain information on the accused's bank accounts.

Swiss Banks have no interest in money derived from illegal crimes and therefore had adopted strict measures in place to prevent unwanted money from entering the country. Identification of the customer, is very imperative for the swiss banks which forms the very important element of due diligence. The banks are required to know their customers, and make sure that their deposits are free from illegal activities. Most of the banks in switzerland would ask the client to show proof for economic origin of funds. Thus the identity of the client ALWAYS known to the bank and limited to certain bank staff. Also there is no such concept of 'anonymous banking' in switzerland. Your identity is always known to the bank.

Due to the recent international pressure and increasing criminal activities committed in switzerland, banks conduct due diligence of any body who wants to bank in switzerland. Banks do screen high volume of money flow in and out of any bank account for illegal activities. The banks always observes 'Know your customer' rules. That is why many brokers do ask for proof for economic origin of funds while opening your account. Visit International money laundering association

Bank secrecy is waived in switzerland, for the following reasons

- Funds from criminal activities, tax fraud, theft, crime, blackmail, money laundering
- Civil Proceedings / bankruptcy cases

For more information visit Swiss Bankers Association

Private banking in Switzerland

Private banks are the banks mostly owned by individual assuming unlimited liability, who can take their own decisions on their bank and also personally liable for their assets in banks commitment. Private banks are among the oldest banks in Switzerland offer accounts chiefly for private clients. Never think of entering a private bank in switzerland, if your deposit is less than $1 million.

The oldest private bank in Switzerland is Bank Wegelin & Co, founded in 1741. In Geneva, the oldest one is Darier Hentsch & Cie, founded in 1796, followed in 1798 by Lombard, Odier & Cie. The “youngest” one is Mourgue d’Algues & Cie, founded in 1869.

You benefit in the following ways from a private bank.
As a private bank customer, you get the world's best banking facilities.
A separate personal account manager will be assigned to you, who will take care of you 24 hrs.
Advise to the worlds best investments in bonds, stock markets, trading.
Highest standards of privacy, automatically attaching your deposits to numbered account.


Numbered account - your secret bank account

Do you know that your privacy, is worth very much in financial matters?

Imagine your money, free from family members, spouses, business persons, tax authorities, govt officials, kept in a distant money haven!

The concept of 'Numbered bank account' originates from Switzerland, and currently prevails in Europe. Very few banks in Switzerland, Liechtenstein, Austria, Latvia issue numbered accounts, popularly in german called as "Nummerkonto". Numbered accounts are the most famous highly private account conceals the identity of the client holding the account owned by big millionaires, business lords, and many eminent personalities worldwide. Numbered accounts (or pseudonym accounts) omits reference to the customer's name or other identifying information, replacing it with a code number or the pseudonym name chosen by the user of the account. All the transactions made in the form of cheques, ATM cards, billing statements show the chosen number or pseudonym name replacing the true name of the account holder. This account, otherwise also known as Named account or Pseudonym accounts. Thus the identity of the clients are never exposed. Infact you can also receive checks in the name of your chosen code.

You have to be very careful in chosing your code name. Your code name, may not contain....
Names of famous persons
referring to business entities
trademarked names
Names of famous products
and must be unique.

Dormant accounts in Switzerland

It might happen that when the account holder dies without leaving any trail of his contact details for a long time,specially in times of sudden death, the bank would try to establish contact with the client without violating secrecy law. Should the banks search turn into an unsuccessful one, it would wait for atleast 10 years to hear from the account holder. If this also fails, then the bank will change the status of bank account from 'active' to 'dormant' and special provisions apply. If the account holder had nominated a beneficiary on account of his death, then the assets held will be transferred to the named beneficiary. The descendents can also claim the 'dormant' assets if they know where exactly the assets were held and which bank. Normally bank would ask for some paper work like death certificate etc. of the account holder. Ironically, the real problem is, it is very difficult to locate a particular bank account, in switzerland as there are about 400 banks in switzerland. You cannot just simply walk into a bank and ask 'Whether this person X is having an account with you?'. There are a list of dormant account holder names published in www.dormantaccounts.ch

To make a search on dormant assets held in accounts opened with Swiss banks by non-Swiss nationals or residents after May 9, 1945 please contact the Ombudsman of the Swiss Banks is an impartial source of information and an intermediary whose services are free of charge.

Swiss Banking Ombudsman
Schweizergasse 21
P.O. Box 1818
CH-8021 Zurich
Tel.: (011) 411 - 213 14 50
Fax: (011) 411 - 210 37 20

If someone suspects that he or she might be entitled to assets held by a Swiss bank, but does not know which one, a search can be initiated through the Contact Office attached to the Ombudsman. A search questionnaire can be obtained from:

Contact Office for the Swiss Banks
P.O. Box 1818
CH-8021 Zurich
Switzerland

http://www.dormantaccounts.ch
http://www.swissbanking.org
http://www.bankingombudsman.ch



How to prevent your swiss bank account from becoming dormant

[Courtesy : MTBI International, Zürich]

1. Change of Name & Address
Please inform your bank immediately if you change your address, or if you use a different name, e.g. following marriage.

2. Special Instructions
Inform your bank if you go away for an extended period of rime and arrange for correspondence from your bank to be sent to a third party or kept
at the bank during your absence.

3. Designating Proxy
It is generally advisable to designate a proxy or representative with full power of attorney who can be contacted by your bank should your assets become “dormant”.

4. Informing Trusted Persons
Another possibility to avoid dormant assets is to inform a trusted person about your bank details. The bank can only give information to such a person if you have first authorised him or her in writing to act on your behalf. You could also list your assets and the name of the respective bank(s) where they are deposited in your will.

What is a swiss annuity?

Swiss annuities are the most trusted and safest regarded asset protection in the world. A 'swiss annuity' is an investment in switzerland, involving a contract between you, the policy holder and a swiss insurance company. You invest a lumpsum and start enjoying benefits in your later life. The significant importance with the swiss annuity is your investment is protected by strict bank secrecy laws of switzerland, just like swiss bank accounts. It can also protect you from creditors, and judgement proof. Switzerland and Leichenstein, both adopt the same secrecy laws in annuity matters. You enjoy interest rate of about 2.5% + dividends + currency value in case of fixed annuity, and you can expect as high 11%-17% in case of variable annuities (depending your risk). Annuities are permitted upto 85 years of age. In case of death, the cash value of your annuity is paid to your beneficiaries. You can chose your way of receiving your returns, say in one year or halfyearly or quarterly. Monthly option is only available to the residents of switzerland. These insurance companies that issue contracts are normally A1 rated insurance companies.

Another significant factor to examine is, until your annuity is fully liquidated, you are qualified for 'tax deferral'. So longer you wait, your money keeps grows at a compounding rate, and deferred from taxes. There is a good news for US citizens, as foreign held swiss annuities are meets the code for IRS tax deferral.

Are you nearing your retirement ? Thinking about your childrens education? Having fears ? But you are unsure about the your financial position! Do it before it is too late. 'Just sow the seeds for paddy today, and reap your profits tomorrow'. It all depends on how good you plan. For more information see: http://www.swissannuity.ch


Benefits of a swiss annuity

- Privacy of your investment is protected by strict swiss secrecy laws. All transactions are kept STRICTLY confidentiale.

- Swiss annuities offer you the most competitive dividend and interest rates. Your money keeps growing at a compounding rate together with principal, plus accumulated interests.

- You can instruct your insurance company to make your payments from the annuity can be made in any currency to any bank in the world of your choice. All transactions are kept private.

- Swiss annuities offer flexibility of choosing your own currency rather than CHF francs by default.

- No capital gains - No stamp duties - No excise taxes - No inheritance taxes - No estate taxes.

- First Class Leichenstein or Swiss Insurance company.

- Swiss annuities are fully exempt from Withholding taxes (35%) imposed by swiss govt on foreign held swiss bank accounts.

- Your swiss annuity is not 'locked out '. you can cancel your annuity anytime or if you chose to en-cash your annuity within a year, you can do it by paying a small penalty (CHF 500). Your annuity is l00% liquid after first year.

- Swiss Insurance companies had NEVER failed in the past 140 year history, as switzerland forms the world's largest strong financial industry. Statistics say that about 35% of the world's wealth being held in switzerland. Thus your money is 'SAFE' in switzerland which is a very importantant factor you should consider.

- According to Swiss law, insurance polices, including Swiss annuities, when properly structured and beneficiaries named, your annuity cannot be attached or seized, and cannot be included in any bankruptcy proceedings. If annuity holder names their beneficiary as children, wife or third person, no creditors of holder or their beneficiaries or liens can attach your annuity held in switzerland, even if they are aware of your annuity in switzerland. If you worry about your assets being seized by creditors, plan atleast a year before to purchase a swiss annuity and name your beneficiary. Time is very critical and crucial.

- No exchange controls can be imposed on your annuity. Policies are subjected to strict exchange controls because there involves a contract between the investor and an insurance company.

- You can also designate your beneficiaries as 'revocable' or irrevocable' in your annuity.

- No forced repartiation of your investments held in switzerland and can be seized by your home country.

- You will always receive payment, even if your annuities value is exhausted.

- Payments can be made to you anywhere in the world, and to any bank of your choice. All transactions are kept strictly confidential

- No Limits on Duration of the Investment [5 Years is the Recommended Term]

- You can switch to different currency of your choice any time.

- There is no limit for your investment in swiss annuity. However the minimum amount of your annuity is USD 20'000 which the most insurance companies demand.

Tax treatment given to swiss annuity

Swiss annuities enjoy tax free status in switzerland. Let us make a quick comparison....1. Swiss Withholding Tax (35%) Exempt
2. Capital Gains No
3. Excise taxes No
4. Inheritance tax No
5. Stamp duty No
6. Swiss Income taxes No
7. US tax deferral Exempt
8. US Withholding tax Exempt



If the benefits are so huge, then why not it is widely available and less promoted?

Just because if these insurance companies from switzerland, promote these products in your country, they have to obey your countries local rules and insurance regulations. If they abide your country rules, you lose your privacy and secrecy. Swiss insurance companies maintain a low company profile and these insurance products little known to only few people outside switzerland. However you are free to approach any insurance company in switzerland and make an investment. Neither any law would prevent you nor any questions asked!
For U.S Citizens

There is no need for US citizens to report swiss annuities to IRS in the Form 1040, as annuities are considered to be an investment and not a foreign held bank account. Both fixed and variable swiss annuities and both qualify for IRS tax deferral, until your annuity is fully liquidated. Also, there is no need to pay any taxes for your annuity until it is fully liquidated.

Normally, IRS requires you to file Form 720 for 1% excise tax (which is 1% of premium paid) if you buy a foreign held annuities. But the recent tax treaty with switzerland eliminates this tax.

If you plan to withdraw your payments before 59 1/2 yrs, IRS might penalise you to pay additional 10% of the already taxed earnings. Please consult your tax advisor for more information.

Swiss Insurance Protection laws on annuity investments

Article 80 of the Swiss Insurance act says that if a policy owner residing outside switzerland, designates his beneficiaries to be his spouse or his descendents or irrevokable designates any third party, no creditors of the policy owner can seize the insurance policy. If the policy owner has waived his right to revoke a designation, then the insurance policy may not be seized by the policy owner’s creditors.

The creditors of a person residing outside of Switzerland cannot seize or include in bankruptcy proceedings of any life insurance policy, even if they have a judgment or a bankruptcy decree from a foreign judge enforceable in Switzerland, unless they can prove that the designation of the beneficiaries of the insurance policy is from under fraudulent conveyance rules.

Creditors of the policy holder, can seize the policy or include in bankruptcy only if they are able to prove that the purchase of this policy is from fraudulent activities or conveyance, as per swiss law. The purchase of the swiss insurance policies and designation of beneficiares, shall stand void, if there are sufficient proof (foreign judgement) for fraudulent conveyance and the designation made within 1 year from the initial transaction. Also as per swiss debt collection and bankruptcy act, if the policy holder had purchased the policy with the full intention of damaging creditors, with named beneficiaries are aware of this, then the designation can be made voidable.

There are so many factors, to be considered for creditors, before they put their feet in switzerland for seizing the policy holders assets.

1. Expensive court costs (US$ 300 per hours charged by many attorneys)

2. They must know where exactly the policy exist, with which insurance company?

3. Creditor must have a specific claim, based on an enforceable judgment or
on a recognition of debt.

4. The creditors must get a cantonal (concerned state) order for the attachement, then had to file a civil proceeding in swiss civil court and must prove in front of a swiss judge, that the policy had been purchased under fraudulent conveyance before seizing money.

This involves too complicated procedures and proceedings.


Swiss Fixed and Variable annuities
Swiss Fixed Annuities

Fixed annuities issued by a top rated swiss insurance company, are primarily for those who do not want to take risks on losing their deposits. Fixed annuities, guarantee a minimum fixed rate, while holding the capital. They qualify for tax deferral and exempt from U.S excise taxes in case of US citizens. Fixed swiss annuity can guarantee you Technical interest @2.5% Dividends@ Variable (approx 1.8% not guaranteed)
Exchange rate @variable.

Fixed annuities are generally termed as 'no risk' investments, best suited for persons wanting zero risk at the time of retirement. There is a minimum investment of USD 20'000 for the fixed annuity we charge. We charge no upfront fee and our brokerage services for fixed annuity is free.

Swiss Variable Annuities

Quite contrary to the fixed annuities, are the variable annuities. The more risk you take on your capital, the higher returns are guaranteed. Unlike fixed annuities, you have the considerable freedom, to choose your strategy portfolio of your own choice. There is no limits for the duration, but we recommend 5 yrs as a mininum term.

There are four types of strategies, you can choose from your variable annuity portfolios, depending upon your level of risk.

- Fixed Strategy ( Risk Level : low)
- Conservative ( Risk Level : middle)
- Balanced (Risk Level : High)
- Dynamic (Risk Level: Very High)

As your risk level goes higher and higher, you expected returns rise in proportion to the risk level. The more risk you take on your investment, the more returns are expected, but not guaranteed, but you have considerable freedom to chose your own choice of investment. Should your investment fall in value anytime, you can easily jump to lower fixed strategy having low risk level. Your variable annuity is always customisable with respect to your own choice and requirement.

We recommend minimum of USD 50'000 for variable annuity. There is no limit for your investment amount and your reference currency is Swiss Francs (CHF)

For US investors, the variable annuities meets IRS code of tax deferral. Under Section 1035 of the Internal Revenue Code, a contract issued by a domestic or foreign insurance company can be exchanged on a tax-free basis for one issued by a foreign insurance company. Form 1035 is used for this purpose. If you choose to your cash values before 59 1/2 of age, IRS may charge you 10% penalty. During your phase of retirement, should your strategies are subjected to risks, you can jump from dynamic to fixed strategy to reduce risk. Should your chosen currency goes down in value, your portfolio has other currencies to compensate this downtrend.

Most frequently asked questions about swiss annuities (80 questions)

[Source : MTB International, Zurich, Switzerland]



We recommend to carefully read and understand this section and your patience would be appreciated very much.

1. What does a Swiss annuity offer?

A Swiss annuity is an innovative, currencyconvertible contract designed to fit the global
diversification needs of today’s investor. The core of this investment is a single premium annuity that guarantees a fixed rate of interest over the coming years, plus profit-sharing dividends. It therefore belongs in your fixed-income portfolio. But for savers, it also provides excellent capital growth opportunities.

2. How does a Swiss annuity work?

Your investment is placed with one of Switzerland’s premier insurance companies for a
given term (also referred to as the accumulation period or period of deferment). Your principal earns interest and dividends until you redeem your annuity in a lump sum or start drawing an income (annultizing). After income payments have begun, the unpaid balance ofyour capital still collects interest and dividend earnings that are paid out with your life income.

3. What are the upfront charges?

There are no upfront fees or charges on your investment. All your invested capital will
immediately begin to accumulate earnings.

4. Is there a minimum investment required?

Yes. To purchase a Swiss annuity investment you will need at least US$20,000 or equivalent in another currency to start.

5. Can I Increase my investment at a later date?

Certainly. You may increase your investment whenever you wish. After sending additional
funds (minimum US$10,000 or the equivalent) to the insurance company, they will automatically issue you a supplementary annuity certificate. Technically, this means you purchase a new certificate in the currency of your existing certificate or, if you so choose, in another currency. To simplify this procedure, you will receive a Policy Kit. In addition to your original policy, your kit includes Increase Option Certificates. Whenever you wish to increase your investment, you Just complete and return the increase-option forms. Many clients use this procedure to regularly increase their Swiss annuity investment.

6. How liquid is my Investment?

It is 100% liquid after the first year. You can then withdraw any or all of your money Including interest and profit-sharing dividends. If you need to redeem your certificate within the first 12 months, you will be charged a handling fee of 500 Swiss francs and you forfeit any first-year interest and dividend earnings.

7. When does my Investment mature?

You determine the duration of your contract at the time of purchase, but you are free to change it at any time during the contract term. That is, you may extend or shorten your chosen term (effective on the next anniversary date of your certificate) or withdraw the cash value of your investment at any time. This flexibility ensures that your investment matures when you need either the funds or the income.

8. Can I make other changes to my certficate at later date?

Of course. You can make changes to your certificate at your discretion as It relates to, for
example, currency denominations, beneficiary clauses, and payment instructions. The only
exceptions are the Person Insured and of course, an irrevocable Beneficiary. These may not be changed at a later date. No special forms are required, simply send your instructions in writing.

9. Who should Invest in a Swiss annuity?

A Swiss annuity certificate provides such safety and flexibility that It makes good sense for
almost everyone at almost any age.

10. How does a Swiss annuity minto my portfolio?

A Swiss annuity is a savings plan, i.e., a basic block for accumulating wealth and also a pension fund providing a guaranteed income for a specified period or for life. In addition, you can benefit from geographic and currency diversification as well as the asset protection features of a Swiss insurance policy.

11. How much can i invest In a Swiss annuity?

There is no upper limit.

12. What about Swiss taxes?

Your earnings are never taxed. They accumulate tax-free and at maturity, are not subject to the 35% Swiss withholding tax unlike traditional Swiss bank accounts. As a non-resident of Switzerland, you are not liable for any Swiss taxes.

13. What are the earnings from a Swiss annuity?

All Swiss annuities earn guaranteed interest (a technical interest rate) of 3.25% on the capital, plus profit-sharing dividends. While the technical interest rate is guaranteed.(it may only be adjusted for new policies), the annual dividends depend on the general level of interest rates in Switzerland and on the insurance company’s investment performance. The dividends are adjusted to market interest rates annually and are, therefore, not guaranteed for the future.

14. What exactly is the “technical Interest rate”?

The technical interest rate is the guaranteed interest rate that Is credited to the investment
portion ofyour annuity certificate. The investment portion is your payment less internal
contract charges. According to the rulings of the Swiss Insurance Association, insurers are entitled to deduct an amount for administration charges and an individual premium of mortality. The interest rate earned is slightly reduced by these charges.

15. What type of total return can I expect?

Interest earnings are supplemented annually by profit-sharing dividends, thus ensuring your
annuity certificate earns competitive market rates. For Swiss franc annuities, these are
approximately the same rate as Swiss government bonds. Historically the average
dividend rate paid out on Swiss franc annuities has been 1%-1.5%, thus resulting in an overall gross yield of 4%-4.5%. In addition, total returns for your annuity will be boosted with the right choice of currency. Due to the long term strength
of the Swiss franc, Investors have made substantial exchange rate gains with Swiss franc
investments. Since the collapse of the “Bretton Woods” system offixed exchange rates, the
Swiss franc has appreciated not only against the dollar but in relation to the other major
currencies. In the last 25 years, the exchange value of the franc increased from $0.26 to $0.81 (annual averages), or an appreciation of 212%. This represents an annual compound growth rate of 5%.

16. How soon does my Investment start earning Interest?

Your annuity certificate starts earning interest the day your premium payment has been
credited to the insurance company’s account.

17. Are profit-sharing dividends paid out or reinvested?

During the accumulation phase, dividends are automatically credited to the annuity principal. During the Income payment period, they are paid out together with the guaranteed income.

18. How do returns compare with other investments?

A Swiss annuity compares very favorably when you look at the net return on other investments (i.e., return after deducting fees, commissions, annual management charges, withholding taxes and income taxes). Remember, with a Swiss annuity there are no upfront charges or withholding taxes on your annuity investment.
The advantages are even more compelling if you factor in the safety (your capital and income are guaranteed), liquidity and privacy of your investment.

19. In which currencies is a Swiss annuity offered?

Recognizing the international investor’s interest in broad currency diversification, a Swiss annuity is offered in Swiss francs, EUR, US dollars, pounds sterling.

20. Can I switch between currencies?

Yes. With a Swiss annuity’s currency-convertible feature, you always have the option to switch currencies whenever you desire. Although a Swiss annuity is not designed as a short-term currency trading Instrument, it does allow you to hedge your currency investment or to further diversify your currency positions.

21. Is there any charge for switching currencies?

Yes. A handling fee of 300 SwIss francs will be charged per switch and per certificate.

22. Can I invest in more than one currency simultaneously?

Yes. You would then receive a separate certificate for each currency investment. For a 50/50 Swiss franc and US dollar investment, for example, you receive two certificates, one in Swiss francs and another with the equivalent In dollars. (Minimum investment per currency: US$20,000 or equivalent.)

23. Why can't i choose the currency that offers the highest interest rate?

Not necessarily. In the long run, the development of exchange rates could be a more decisive factor than interest rates. Such factors as inflation rates, savings rates, fiscal balances, current account balances and economic growth greatly affect the value of a currency in the long run. A Swiss franc investment with a return of say, 4%,
could turn out to be substantially better than an ECU one at 8%.

24. What currency should I choose then?

Obviously It makes sense to choose a currency that provides consistently good growth in
comparison to other currencies. The Swiss franc has been stronger than any other currency in the world over the past 25 years.

25. When should I convert my home currency into Swiss francs?

As with any investment, you should buy when prices are low. That is, use any temporary period of weakness in the Swiss franc to convert your money. If you prefer not to try to time the markets, buy a series of equally-valued certificates in your currency and convert them into Swiss francs at regular Intervals. In volatile markets, cost-averaging ensures that you won’t pay peak prices.

26. How soon can I expect to see currency appreciation?

With a long holding period, the long-term trends are what counts. It is next to impossible to pinpoint the exact week or month your investment currency will take off relative to other currencies.

27. What about inflation?

Inflation reduces your return on investment because the proceeds buy fewer goods than in
previous periods. Since Inflation affects a currency’s strength vis-~-vis other currencies,
investing in low-inflation currencies Is one way offset the loss of an Investment’s purchasing power.

28. What about the Swiss franc’s purchasing power?

Over the last 25 years, the Swiss franc’s appreciation would have offset more than 70%
the loss through inflation in the US dollars buying power. The same general trend Is true
with respect to other major currencies; the Swiss franc retained its purchasing power best of all. With,Switzerland’s continuing low inflation rates (close to 1% annually), the Swiss franc will most likely maintain its strong position against the dollar as well as other currencies.

29. Does the Insurance company Invest the different currencies (offered by a Swiss annuity) separately?

Yes. The different currencies offered by a Swiss annuity are invested and held separately. For example, for Swiss francs, the purchases for Swiss franc denominated annuity includes Swiss real estate, government bonds and other firstclass
Swiss investments. Similarly, US dollar denominated investments are purchased for US
dollar annuities.

30. When converting from my home currency or switchIng between currencies, how is the exchange rate set?

Foreign exchange rates published In newspapers are on “round lot” of US$5 million traded among banks. These interbank rates are only “lndicators~ of what an individual investor might expect. Your deposits are always converted to the selected currency according to the prevailing exchange rate at the Swiss bank handling your payment.

31. Can I have my own bank convert my home currency into the Investment currency(ies)?

Yes. Your home bank can convert your home currency and make a Swiss franc or other
currency transfer to Switzerland. However,experience has shown that this method is more
costly (because of fees and less attractive exchange rates) than if you send your home currency funds directly to the insurance company and have them execute the currency exchange for you.

32. If I request a switch In currencies, how quickly this done?

Currency conversion is executed within five banking days upon the insurance company’s
receipt of your written request for conversion.

33. Why should I invest abroad when there are plenty of interesting investments In my own country?

If you only have your money in domestic company stocks or mutual funds, your portfolio
will invariably suffer heavy losses if your local stock market takes a plunge. So you need to diversify into other asset categories, such as bonds or precious metals. Similarly, investing outside your own country is an important way reduce the risk of a collapse in asset markets your country. The Nobel Prize-winning Modern Portfolio Theory has proven that you can increase your overall return and reduce risk through diversification.

34. How much of my assets should I place in overseas investments?

There are no hard and fast rules for the amount you should invest abroad. While some experts suggest as much as 40% of your portfolio, a lot depends on your individual situation, such as when you need the funds or income from your
investments, your tolerance for risk, and how view the prospects of foreign economies. For some individuals seeking asset protection possibilities, the percentage may be larger for “safe-in-any-case” nest egg.

35. How can I be sure that Switzerland is the right country to send my money to?

Switzerland has earned its reputation as the world’s foremost safe haven through over 700
years of democratic government, the country’s vowed political neutrality and respect for financial privacy.

36. How does Switzerland compare with other countries?

Switzerland has been consistently rated No.1 for political, financial and economic stability by the International Country Risk Guide.

37. As an overseas investor, how complicated to invest In Switzerland?

It’s at least as easy as opening a bank account in your own country, since you need not even leave home. You just need a pen and fill up few forms. Its that simple.

38. Do you have any particular advice for those new to international Investing?

When taking the important first step abroad, safety should be your top priority. Invest in the safest investments and with secure institutions only.

39. Why are Swiss annuities a “better deal” than the traditional Swiss bank account?

Basically, Swiss annuities provide the international investor with approximately the
same yield as Swiss government bonds yet are not subject to the 35% Swiss withholding tax on interest income charged to traditional Swiss bank accounts. For US based investors, Swiss annuities are not reportable as a foreign financial account
to the Internal revenue Service (IRS). Interest is guaranteed, and all interest and dividend
earnings accumulate tax-deferred. In addition, Swiss annuity certificates can provide you with asset protection possibilities in a simple and inexpensive way.

40. Is a Swiss annuity judgment-proof?

According to Swiss law, insurance policies - including Swiss annuities - when properly
structured, are not attachable and cannot be included in any bankruptcy proceedings or be
seized by creditors. This applies even if a judgment or court order specifically orders the
seizure of your annuity or Its inclusion in the estate in bankruptcy settlement. Please refer to the legal opinion for a more in-depth analysis of judgments and bankruptcies.

41. How do I make payment when I invest?

You can either send a personal check or cashier’s check, made payable to the insurance company, or have your funds wired directly to the insurance company’s bank account.

42. What documents must I send with my application?

Proof of the birth date of the person insured by Including a copy of either a birth certificate, passport, drivers license, or other official document.

43. Is there any age limits when purchasing a Swiss annuity?

Swiss annuity certificates can legally be issued to age 85. When the owner of a policy reaches age 85, that policy owner must decide whether to redeem his or her investment or to take a life come.

44. Can a Swiss annuity be held jointly?

Yes it can.

45. How many different parties can be Involved?

The purchase of an annuity certificate may Involve five different parties: The person,
company or other legal entity who pays for the investment (premium payer). The person,
company or other legal entity who owns the certificate (applicant or policy holder). The
person on whose life the figures are calculated (person Insured). The person, company, or other legal entity who would receive the certificate value in case of death of the person insured (beneficiary). The person, company, or other legal entity who Is to receive any lump-sum settlements or life income at the end of the scheduled accumulation period.

46. Why do I need to state investment duration?

According to Swiss insurance regulations, insurance companies must state in writing the
exact amounts they guarantee. To calculate these amounts, the investment duration is
required. You can later shorten or lengthen this period.

47. What procedure do I follow to redeem my Swiss annuity certificate?

To redeem your certificate, first return the original policy along with a payment-instruction
letter to the insurance company. They will then send you a cash value statement of your policy. Sign and return this statement. After receiving the signed statement, the insurance company will proceed to make the payments as per your instructions. You may pickup the funds in cash at the Insurance company’s headquarters, or request a check or a bank transfer to a designated bank account.

48. How iong does this procedure take?

The entire procedure takes approximately four weeks. The redemption process can be
accelerated by about 10 days if you authorize your Swiss representative to sign and return the cash-value statement on your behalf.

49. What happens at the end of the accumulation period?

If you do not choose to extend the term, you have two options at the end of the accumulation period; you may get back the full certificate value including all accumulated interest and dividends, or choose to receive an income for either a specified period or for as long as you live.

50. How are annuity payments scheduled?

Annuity payments are available quarterly, semiannually, and annually. You can choose how you want the annuity payouts, e.g., by check to you or directly to a bank account anywhere In the world.

51. Can I borrow against my annuity?

Your Swiss annuity has an account value (cash value) that is at your disposal at any time. You can also use this value as collateral for a loan from the insurance company. There are some tax consequences and they should be considered when borrowing against your annuity.

52. What Interest rate is applicable to such a loan?

Market rates apply (roughly the rate on Swiss government bonds plus 1.5% to 2%). However, your annuity certificate continues to earn interest and dividends on the full (pre-loan) investment amount.

53. Once I choose to receive a life income, is there any charge for having my annuity payments transferred abroad?

Any standard banking expenses e.g., transfer costs or costs for issuing a check, will be debited from your account.

54. What does it cost me when I take my money out of a Swiss annuity?

Nothing. There are no redemption fees when you cash in your Swiss annuity investment after the first year.

55. Are there any annual management fees?

The cost factors on an insurance or annuity investment indude a “term-insurance premium”, administration and placement costs and a small interest margin for the insurance company. In traditional insurance products, the bulk of these expenses are charged upfront. For Swiss annuities, these costs are spread over many years, thus giving the investor a much better initial investment base. However, the guarantee interest of 3.25% is reduced by administrative and other costs, resulting in a slightly smaller net amount paid.

56. Can any future charges be implemented once I’ve made my Initial Investment?

Only if you dedde to switch the currency denomination of your certificate. Then the Sfr
300 handling fee is charged to your certificate.

57. Can I make partial withdrawals on my certificate?

Yes. But, here’s a tip to reduce paperwork and save time later. If you already know that you will be making partial withdrawals in the future, then purchase a series of certificates in the investments you will need, rather than putting it all in a single certificate. You will then be adding flexibility to your investment. It will be easier to switch to different currencies later or you can receive an annuity income on part, but not all, of your investment.

58. What happens upon my death?

If, as in most cases, you are both the Person Insured and the Owner of the certificate, the
certificate value is paid in a lump sum to the beneficiary(ies) you have named.

59. What If I am the Owner of the certificate but not the Person Insured?

Unless you have specifically designated another Owner in writing to the insurance company, the ownership of the certificate is paid to your legal or designated heirs according to your last will and testament.

60. Can a legal entity be the Owner of the certIficate?

Yes. Any legal entity such as a trust, corporation, pension plan, foundation or establishment can be the Owner as well as the Beneficiary of the annuity certificate. Refer to the legal opinion for an analysis of trust and corporation annuity ownership.

61. In the application for an annuity certificate, what does it mean to be the beneficial owner?

As both owner and beneficial owner, you are not acting on behalf of another person to invest his or her funds. In case you are doing so, by law, insurance companies and banks are required to ask you who the beneficial owner Is.

62. Does my choice of owner affect the value of my Investment?

No. Whether the owner of the certificate is a person or legal entity (pension plan, trust,
corporation, etc.), the certificate value remains the same.

63. Does my choice of the person Insured affect the value of my investment?

It depends. The investment’s value remains virtually identical during the accumulation period. If you choose to annuitize, however, the annual income that is then paid for life will obviously vary according to the age ofthe person insured (because of different life expectancies).

64. Am I protected against future exchange controls?

Although exchange controls have existed in various countries and may be reintroduced one day for people who hold overseas bank accounts, these have never been applied to foreign annuities. It seems unlikely that a country would force repatriation of foreign annuities in the future.

65. What happens If I move to another country?

Your Swiss annuity certificate remains valid regardless of where you live.

66. How private is my investment?

Swiss law forbids the disclosure of assets held by an individual in a Swiss bank or insurance company to any person or government authority.

67. What should I do If I lose my Swiss annuity certificate?

If the policy becomes lost, mislaid or stolen, notify the insurance company immediately in
writing. They will then issue a “Declaration of Loss”, which requires your signature. This
declaration replaces your original policy. If your original policy turns up, you should advise the insurance company again in writing.

68. Can the guaranteed rate of interest ever be changed?

No. It can’t. You are assured to receive the guaranteed interest rate for the life of your
annuity certificate.

69. Can I have the Life income payments from my annuity certificate paid into a bank account outslde my home country?

Yes. You can. Simply send your instructions in writing to the insurance company.

70. Can I find out the value of my certificate whenever I need to?

Yes. You can request information about your certificate’s value anytime.

71. When do I receive my account statements?

You will receive your first statement, including all interest and profit-sharing dividends earned, on the first anniversary of your certificate. Thereafter, you will receive a full account statement at the end of the year and on the anniversary date.

72. How closely do I need to monitor my investment?

Since you are guaranteed a certain rate of growth in terms of the currency you have chosen and will additionally receive profit-sharing dividends, the value of your investment in that currency does not fluctuate as with stocks, bonds, etc. But the currency in which your Swiss annuity certificate is denominated will rise or fall against your home currency. So your choice of investment currency matters, particularly in the long run.

73. Who stands behind my Swiss annuity?

The insurance carriers recommended have consistently maintained careful control over their balance sheets and are in impeccable financial condition. They represent some of Switzerland’s oldest and biggest life insurance companies, stable and long-term oriented.

74. How can I be sure my Investment is safe?

In the more than 140-year history of the Swiss insurance industry, there has never been a single failure of a Swiss insurance company. Policy holders in Switzerland enjoy a level of security and protection greater than in any other country.

75. Is an Independent general rating of Swiss Insurance companies available?

No. Swiss insurance companies are not analyzed by the well known rating companies. In any event, only five insurance companies have special policies for the international investor, and all of these are either old, established blue-chip companies or are owned by one.

76. Are Swiss insurance companies regulated?

No. The absence of ratings is more than compensated by the industry’s long history of
finandal stability, the result of stringent insurance laws and rigorous supervision of the
policies and activities of insurance companies by the Federal Office of Private Insurance. Federal regulators require that life companies fully cover their obligations with secure investments and sufficient cash flow.