


                                 The Withholding Tax

                    The Swiss impose a 35% withholding tax on interest
               paid in Swiss francs. You can recover this money by the
               simple expedient of declaring the interest to the IRS.
               You will come out ahead doing this, because you will
               receive a refund, if you are in the standard 28%
               bracket and not subject to state or city income taxes.
               However, the Swiss do not issue 1099 forms, and it may
               be difficult to determine the appropriate exchange rate
               for the dollar.
                    One way to avoid the withholding tax is to have an
               account denominated in a currency other than the Swiss
               franc. A certificate of deposit can be denominated in
               Swiss francs, but held outside the country. However,
               such accounts may be only as sound as the foreign bank
               into which the Swiss bank placed your money.  Another,
               very common, way to avoid the withholding tax is to
               have the Swiss bank act as your money manager, in what
               is called a fiduciary account.  All of the investments
               are made outside of Switzerland, in whatever you tell
               the bank to do -- mortgages, mutual funds, other banks.
               The money is merely passing through Switzerland, and is
               not taxed there.
