


                           About the Editor

               Adam Starchild can occassionally be persuaded
          to take time off from his private entrepreneurship
          activities to write.  During these interludes he
          has written over a dozen published books and
          hundreds of magazine articles, primarily on
          international business and finance.  Four of his books 
          have been on tax havens, the earliest in 1978, and the
          most recent in 1993.  His articles have a appeared in 
          a wide range of publications  around the world -- 
          including Euromoney, International Living, 
          The Futurist, Tax Planning International, 
          Trusts & Estates, and many more.




                                Discretionary Accounts

                    If you have something on the order of $100,000 to
               invest (depending on the bank, more at most of them),
               you might consider a discretionary account with a Swiss
               bank. The bank will manage the investment for you,
               according to criteria you define. The investment will
               move among markets and currencies and instruments,
               according to the bank's best judgment.
                    For this sort of operation, you should consider
               Geneva's private banks, rather than the large
               nationwide Swiss banks. Most of these banks require a
               $250,000 minimum investment. Remember that most of the
               smaller Swiss banks (except for Baer and Vontobel,
               which are listed on the Swiss stock market) do not
               publish their balance sheets. Many of them will not
               accept business without an introduction. This is not a
               matter for a first-time overseas investor to undertake
               with only a book as a guide.
                    The leading Swiss private banks are Pictet,
               Lombard Odier, and Hentsch in Geneva. (Hentsch will
               take an account with $100,000, but the others probably
               will not.) They do not welcome walk-in clients. Two
               other private banks are a bit more accessible.
               Gutzailler, because it is a Eurobond issuer, and
               Vontobel, because it does corporate finance. It is
               possible to use a corporate banking relationship as a
               doorway to private banking services at these banks,
               which is why they are included in the listings at the
               end of this chapter.
                    Swiss banks have developed the gold storage
               business into a fine art. Although the days of sales
               tax-free gold buying in Switzerland are over, the fee
               for storing your gold in Switzerland is still quite
               low. The minimum for having a Swiss bank store your
               money is one kilogram (2.2 pounds) or 30 gold coins. It
               is perfectly legal for Americans to buy and store gold
               outside the United States. You do not have to declare
               to any authorities that you own gold abroad in any
               amount. However, you should declare for U.S. taxes any
               capital gain from a sale of gold.
                    Despite these options, most foreigners in
               Switzerland have simple bank accounts. Most of these
               are not numbered accounts, but ordinary name accounts.
               The minimums for ordinary accounts (which vary by bank)
               are much lower. You can arrange for your bank to keep
               your statements for you or send them in a plain
               envelope once a year. You can work out a code with your
               bank to be sure that, when you call, the person on the
               other end of the telephone actually is you. Most common
               is to give your mother's maiden name.
                    The largest banks operate throughout the country.
               Private banks are concentrated in Geneva because most
               of their clients historically were French.
                    Many Swiss bankers (and even bank employees at the
               bottom of the totem pole, such as tellers and
               switchboard operators) speak English. They also speak
               German, French, and Italian as a matter of course and
               frequently speak other languages as well, such as
               Spanish.

               Still the safest wealth protection haven

                    Based on liquidity ratio (a function of how easily
               a bank can cover its outstanding obligations by selling
               off its assets), the following banks are the safest in
               Switzerland, and perhaps the world.
                    These banks will open accounts for new clients
               only if they are known to the bank or are recommended
               by an advisor or correspondent with whom the bank is
               familiar.

                    Banque Financiere De La Cite
                    Banque Lausannoise de Portefeuilles
                    BFZ Bankfinanz
                    Cambio Valorenbank
                    Dreyfus Sohne & Cie
                    Ferrier Lullin & Cie SA
                    FIBI Bank (Switzerland) Ltd.
                    Guyerzeller Bank
                    PBZ Privatbank Zurich
                    Ruegg Bank Zurich



                                 The Dutch connection

                    One way to invest in a broad portfolio with a
               Swiss bank without too much money is through the Dutch
               mutual fund group Robeco (Rotterdamse Belegings Co.).
               The Dutch group was founded in 1929. The SEC doesn t
               approve of it because it is publicly listed and
               open-ended. (In the United States, publicly listed
               mutual funds are closed-ended.)
                    In practice, this means that Robeco intervenes on
               the Dutch stock market to repurchase its shares or sell
               them to keep the price close to net-asset value.
               Legally, the funds in the group are incorporated
               investment institutions with variable capital.
                    The Robeco group is the largest mutual fund
               management group in the world outside the United States
               and Britain, with funds under management topping $15
               billion. It offers four funds: Robeco, an equity fund
               aiming at worldwide blue chips; Rolinco, an equity fund
               aiming at growth but still prudent; Rodamco, a
               diversified international real estate investment
               company (whose largest investments are in the United
               States) aiming at appreciation and income; and Rorento,
               a bond fund, a fixed-interest accumulator trust aiming
               at earning interest and capital gains. Investors can
               switch among the funds without fees. The Dutch fund
               management group has opened a bank in Geneva, Banque
               Robeco (Suisse), and which acts as a distribution
               center for Robeco products outside the Netherlands.
                    A few years ago, the Dutch government began to
               fuss about nondistributed earnings being reinvested in
               the funds and threatened to make trouble about getting
               identification from new clients (as part of a crackdown
               on tax evasion within the Netherlands). To help
               circumvent these developments the group opened its bank
               in Geneva. The whole operation still is essentially run
               out of Rotterdam, with the added advantage of Swiss
               secrecy and multi-currency efficiency.
                    Deposits or withdrawals can be made in any major
               currency. The highly efficient computerized system
               automatically reinvests all dividends (without
               withholding taxes, as would be required were Robeco
               Swiss rather than Dutch). The minimum investment is
               $5,000, and you can divide it among up to four funds to
               best match your investment needs.
                    These folks speak English well: Robeco, N.V., Heer
               Kobelweg 133, Postbus 973, NL-3000 Rotterdam, The
               Netherlands; tel. (31-10)465-0711; fax (31-10)465-1544.



                             SWITZERLAND AND EUROPE

                    1991 was Switzerland's 700th birthday, but there
               was no grand, flag-waving celebration.  Throughout the
               year, cities and villages celebrated in their own way,
               with alpine yodeling and wrestling fests, fireworks
               over Lake Zurich, and ballet in Lausanne.
                    This country -- made up of 26 highly independent
               cantons, embracing four languages -- is simply too
               diverse to host a big, nationalistic bash such as the
               United States put on in 1976, the Swiss explain.
                    Seven hundred years ago, if legend is to be
               believed, three brawny peasants met on a pretty meadow
               called the Rutli at the foot of the steep climb to the
               St. Gotthard pass, then as now the most direct route
               from the upper Rhine to Venice and the silk routes
               leading east. The perpetual alliance they swore is
               usually considered the nucleus of the Swiss
               Confederation.
                    The three men in the meadow 700 years ago were
               tribal chieftains of what later became the cantons of
               Schwyz, Uri and Unterwalden. They signed a treaty for
               mutual protection in the crisis of succession after the
               death of the Habsburg ruler Rudolf I. The Habsburgs'
               ancestral castle was not far away, and the men of the
               forest cantons worried that some more remote king might
               be less amenable to leaving them alone to collect
               bridge-tolls and provide guided mule trains.
                    Twenty years later the neighbors in Lucerne were
               invited to join the loose confederation. Its influence
               spread, sometimes by persuasion and often by conquest,
               only after a resounding defeat by the French at
               Marignano in Lombardy in 1515 did the mountaineers
               decide to eschew foreign military adventures. That
               neither kept them from fighting among themselves for a
               few centuries more nor, since the country was
               desperately poor in natural resources, from hiring
               themselves out as mercenaries for others. The last
               survivors of that practice are the Vatican's Swiss
               Guards.
                    But expansion has its limits.  In December, 1992,
               the Swiss electorate voted against affiliation with the
               European Community.
                    What should we make of the Swiss vote?  Here is
               the richest country in Europe (and on some measures the
               richest in the world), in the middle of the world's
               largest trading bloc, saying it can stand back from
               closer union.  On the face of it, it looks as though
               the Swiss have made a serious and uncharacteristic
               error, at least in economic terms.  While the vote will
               not lead to any economic catastrophe, conventional
               wisdom suggests that it will clip something off future
               growth.  Swiss firms live by their exports and, to some
               extent at least, they will find it harder to export
               across the border.  They may be forced to push some
               production over to subsidiaries within the European
               Community.  Perhaps some investment that would have
               gone to Switzerland will go elsewhere.
                    It was fear that the brilliant Swiss economy would
               be damaged that encouraged the political leaders to
               press for membership of the European Economic Area.  Is
               this a case of ordinary voters allowing their hearts to
               rule their heads against the advice of the
               establishment?
                    The conventional view was that the decision would
               hinder future economic growth.  It reckoned that as far
               as the stock market was concerned a combination of
               higher trade costs and lower gross domestic product
               growth would more than offset any advantages from non-
               membership such as lower interest rates and freedom
               from EC competition policy.  By this theory the
               economic effects of a "no" vote would justify a
               permanent fall in Swiss share prices.
                    This was an intriguing exercise, but of course a
               move in the stock market of between 5 and 10 per cent
               is not that much, given the scale of the swings that
               take place in securities prices every week. The
               implication for growth is perhaps more worrying.  A
               major investment banking firm, Goldman Sachs,
               immediately published a crisis report reckoning that
               the diversion of investment following  the "no" vote,
               and labor migration (skilled people leaving) might
               together chip 0.6 per cent off annual growth over 10
               years.  That would be quite a lot, if it were to
               happen.
                    But will it?  There is a counter argument to be
               made, which is that staying outside the EEA might
               actually enhance Switzerland's economic performance. It
               runs like this.
                    Switzerland happens to be in an extremely strong
               structural position. It has great strength in
               industries that look like being  winners for the next
               decade or more. These include financial   services (the
               three big banks and the Geneva-based fund management
               industry), pharmaceuticals (the three big chemical
               companies), food  (Nestle, Suchard), and up-market
               tourism (St. Moritz, Klosters and Verbier).
                    These are all areas of the world economy in which
               Japan and the newly industrialized countries cannot
               actively compete, and where the price of the product is
               not being constantly shaved by some new technological
               advance.  By contrast, Switzerland is not  strong in
               cars, aircraft, electronic consumer durables, computers
               -- all areas where European industry is, or is about to
               be, threatened by the Far East.
                    In that sense it is better protected than most of
               the EC. Switzerland does have important industries in
               areas like machine tools, which are more open to
               international competition and might suffer if the
               economy were distanced from the rest of Europe, but
               much of its strength is in areas where it is quite well
               protected.
                    Indeed in some of these areas, being outside the
               EC is a positive advantage.  Take financial services,
               which accounts for 30 per cent of the value of the
               securities on the Swiss stock market. Swiss banks trade
               on their safety and their discretion. It was
               fascinating to see that foreign money actually flowed
               into Swiss securities following the vote.  Switzerland
               was perceived as being a safer place to put cash if it
               remained outside the EEA,  presumably for fear that at
               some future date the EC bureaucrats  would get their
               fingers on those numbered bank accounts.
                    In most of the other areas noted above, EEA
               membership is not really an issue.  In pharmaceuticals
               there might be some modest disadvantage from staying
               outside, but the market is such an international
               "brain-based" one that it is hard to see any serious
               damage. Food products?  Well, Nestle generates roughly
               97 per cent of its turnover outside Switzerland, and is
               not really dependent on exports across the Swiss
               national boundary into the rest of Europe. Tourism?
               Membership of the EEA is not an issue.
                    So while there might be some modest disadvantage
               to Switzerland, the Swiss winners would be fine.  Some
               sectors, in  particular financial services, would do
               better by staying outside. The effect might therefore
               be merely to push the country even further towards its
               specialties. But since these are good growth areas that
               does not matter. One could even construct an argument
               that Switzerland will benefit by keeping apart from the
               rest of Europe.

          
          
          
                             The Use of Tax Havens
          
               Tax havens are one of the most important subjects
          for an international entrepreneur, yet few understand
          and use them properly.  One group discount them as
          hiding holes for dirty money, which is not a legitimate
          use for tax havens. Others think they are only for
          banking money after you have made it.  Not true either.
          Money grows much faster if a tax haven is part of your
          business planning, and almost any international
          business has an opportunity to use tax havens.  It is
          the purely domestic business, confined to one country,
          that cannot benefit from the international fiscal
          loopholes.  Switzerland is a major financial center,
          but not generally a tax haven.
               Simply stated, a tax haven is any country whose
          laws, regulations, traditions, and, in some cases,
          treaty arrangements make it possible for one to reduce
          his overall tax burden.  This general definition,
          however, covers many types of tax havens, and it is
          important that you understand their differences.
          
          No-Tax Havens.  These are countries that have no
          income, capital gains, or wealth (capital) taxes, and
          in which you can incorporate and/or form a trust.  The
          governments of these countries do earn some revenue
          from corporations; "no-tax" means that what you pay is
          independent of income derived through a company.  These
          states may impose small fees on documents of
          incorporation, a small charge on the value of corporate
          shares, annual registration fees, etc.  Primary
          examples are Bermuda, Bahamas, and the Cayman Islands.
          
          No-Tax-on-Foreign-Income Havens.  These countries do
          impose income taxes, both on individuals and
          corporations, but only on locally derived income.  They
          exempt from tax any income earned from foreign  sources
          that involve no local business activities apart from
          simple "housekeeping" matters.  For example, in such a
          haven there is often no tax on income derived from
          export of local manufactured goods.
          
          The no-tax-on-foreign-income havens break down into two
          groups.  There are those that allow a corporation to do
          business both internally and externally, taxing only
          the income coming from internal sources, and those that
          require a company to decide at the time of
          incorporation whether it will be one allowed to do
          local business, with the consequent tax liabilities, or
          one permitted to do only foreign business and thus be
          exempt from taxation.  Primary examples in these two
          sub-categories are Panama, Liberia, Jersey, Guernsey,
          Isle of Man and Gibraltar.
          
          Low-Tax Havens.  These are countries that impose some
          taxes on all corporate income, wherever earned.
          However, most have double-taxation agreements many the
          high-tax countries that may reduce the withholding tax
          imposed on income derived from the high-tax countries
          by local corporations.  Cyprus is a primary example.
          The British Virgin Islands is another, but no longer
          has a tax treaty with the U.S.
          
          Special Tax Havens.  These are countries that impose
          all or most of the usual taxes, but either allow
          special concessions to special types of companies (such
          as a total exemption from tax on  shipping companies,
          or movie production companies) or allow very special
          types of corporate organization, such as the very
          flexible corporate arrangements offered by
          Liechtenstein.  The Netherlands and Austria are
          particularly good examples of this.
          
          To understand the precise role of tax havens, it is
          important for you to distinguish two basic sorts of
          income:  (1) return on labor and (2) return on capital.
          The first kind of return is what you get from your
          work:  salary, wages, fees for professional services,
          and the like.  The second kind of return relates,
          basically, to the return from your investments:
          dividends on shares of stock; interest on bank
          deposits, loans and bonds; rental income; royalties on
          patents. It is the second kind of income, income from
          an investment portfolio, that tax havens are useful
          for.  Forming a corporation or trust in a tax haven can
          make the second form of income totally tax free, or
          taxed so low that you will hardly notice. Certain types
          of businesses can be effectively based in a tax haven.
          If you publish a newsletter, for example, you might be
          able to set up the entire operation in a totally tax
          free country such as the Bahamas or the Cayman Islands.
          If your income comes from copyright royalties, perhaps
          on the computer program you invented, the Netherlands
          is famed as a base for sheltering royalty income.
          
               Tax havens are a very complex subject, but the
          hours you spend studying their use will probably pay
          you more per hour than the hours you spend directly
          earning an income -- an unfortunate commentary on the
          confiscatory taxation policies of most governments.
          
               For the best detailed information on tax havens,
          order The Tax Haven Report from Scope International
          Ltd., 62 Murray Road, Waterlooville,  Hants., PO8 9JL,
          United Kingdom.  Price is approximately US$135,
          including airmail postage worldwide, and they accept
          Visa or MasterCard.
          
               Just stop and think for a moment how much faster
          your money can grow if you are not paying out an
          average of 40% to a taxing government somewhere.
          
          



                             THE SWISS INSURANCE INDUSTRY

                    Insurance companies belong to one of the most
               important sectors of the economy in Switzerland.  It is
               also extremely conservative and safe.  In 130 years
               none have failed, a record that even Swiss banks cannot
               match.  Unique tax advantages combined with
               conservative money management cause Swiss insurance
               products to perform much better than one might expect.
               Conservative does not have to mean low returns.  (If
               the insurance company doesn't have to deduct losses on
               a lot of bad investments, it is much easier to maintain
               a conservative, safe, high return.)
                    Swiss government insurance company regulation
               keeps investment portfolios at a nearly no risk level.
                    Liquidity and valuation of investments are ultra-
               conservative.  Only a maximum of 30% of investible
               funds may be put in real estate.  Swiss real estate has
               always held the highest values, but this is ultra-
               conservatism at work.  If it should go down, it might
               not be liquid enough to cover claims -- so let's be
               ultra-conservative and severely limit the exposure.  A
               philosophy that a lot of American banks and insurance
               companies are probably now wishing they had followed --
               or at least their policyholders are wishing they had.
                    Then just in case this isn't enough, Swiss
               insurance companies often carry their real estate
               holdings at less than half their present market value,
               allowing a very wide margin of price changes before
               safety can possibly be affected.
                    Swiss accounting in general seems to be on the
               conservative side.  Companies tend to have hidden
               reserves of millions, rather than the North American
               style of overvaluing assets to achieve a high stock
               market price for takeover bids.  This conservatism
               applies all the more to the insurance industry.
                    The Swiss insurance companies offer a greater
               range of services than the American investor is used
               to.  In fact, the range is broader than that offered by
               most Swiss banks.  There are only about 20 insurance
               companies in Switzerland.  This concentration makes the
               industry stronger, and easier to supervise, than the
               thousands of American insurance companies.  There are
               no weak insurance companies in Switzerland, unlike the
               United States were insurance laws in many states permit
               an insurance company to be formed with capital as low
               as $100,000, and licensed, empty insurance company
               shells are frequently sold in classified ads in The
               Wall Street Journal and other newspapers.
                    The industry is regulated by the Swiss Federal
               Bureau of Private Insurance -- a very strict regulator.
                    There is no rate competition -- the emphasis is on
               maintaining the strength of the insurer, and
               prohibiting risky investments (although it is unlikely
               that a Swiss insurance manager would even think of
               making a risky investment).
                    Regulation of private insurance companies has been
               established by a clause in the Swiss federal
               constitution since 1885.  Contrast this to the United
               States where insurance companies are often regulated
               only by rules promulgated by a politically appointed
               insurance commissioner, who expects to be employed by
               an insurance company when the governor who appointed
               him is retired in a few years.
                     BOOKS BY ADAM STARCHILD


          It's Your Money: A Consumer's Guide to Credit
                  Books for Business

          How to Develop and Manage A Successful Condominium
                  Books for Business

          Business in 1990: A Look to the Future
                  anthology introduced and edited by Adam Starchild
                  University Press of the Pacific

          Starchild & Holahan's Seafood Cookbook (co-author)
                  Pacific Search Press

          Tax Havens: What They Are and What They Can Do
                for the Shrewd Investor
                  Arlington House

          Tax Havens and Corporations
                  Gulf Publishing Co.

          Investing in the USA
                  Euromoney Publications

          The Amazing Banana Cookbook
                  Lakewood Books

          Everyman's Guide to Tax Havens
                  Paladin Press

          The Tax Haven Story
                  PPI Publishing

          Establishing Self Employed and Individual Retirement Plans
                  PPI Publishing

          Building Wealth: A Layman's Guide to Trust Planning
                  AMACOM, publishing division of
                    the American Management Association

          How to Develop Your Own Construction & Land
                Development Business
                  Nelson-Hall Publishers

          Tax Planning for Foreign Investors in the U.S. (co-author)
                  Kluwer Law & Taxation Publishers

          The Seafood Heritage Cookbook
                  Cornell Maritime Press

          Marketing Computer Hardware & Software in Latin America &
              The Caribbean
                  Books for Business

          The Tax Haven Report
                  Scope Books


                  You will find these and other books by Adam
          Starchild listed in Books in Print at your public library
          or bookstore.  These books generally are not available
          directly from the author, but most bookstores will order
          them for you directly from the publishers.  Those books
          which are out of print may be obtained from the Books on
          Demand Service of University Microfilms in Ann Arbor,
          Michigan.  Again your bookstore may place this order for
          you, or you may obtain current price and ordering
          information by calling University Microfilms.

                The Shareware Principle Extended to Consulting

                 Offering this material on disk through shareware
          distribution channels is an experiment.  The principle of
          "try before you buy" computer shareware is now well
          established, and the author is now offering a test of
          "try before you buy" consulting services.
                 Normally the author works with a client's own
          lawyers and accountants, advising them on the comparative
          advantages and legal structures available in the various
          tax havens, while the domestic professionals then relate
          that knowledge to the tax laws of the particular client's
          country of citizenship and/or residence.  The author's fees
          for such consultations are normally $250 per hour plus
          travel expenses.  You now have the opportunity to study the
          basic structure of that advice, and determine if you can
          use it in your personal financial situation.  There is no
          set fee for the use of this program, and the author leaves
          it to the individual user to determine how much use he has
          derived from it.
                 If you read it and enjoy it as a book, but have no
          particular use for the information except as information,
          then a price similar to that you would have paid for a book
          would be appropriate -- say $25.  (The author's books on
          tax havens sell for as much as $125.) If you are using this
          program as a substitute for personal consultations, then a
          substantially larger fee is requested -- a minimum of $250
          would be appropriate.  Checks should be made payable to
          Adam Starchild and mailed to:

                Adam Starchild
                P. O. Box 917729
                Longwood, Florida 32791
                U.S.A.

                 It is understood that some readers of this type of
          information may prefer to leave no trail by sending a money
          order, or remain anonymous even to the author by sending a
          money order or cash.  That is perfectly acceptable.  Others
          may prefer to maintain proof of payment in order to take a
          tax deduction for tax or investment information.


                             Swiss Secrecy: Not A Legend

                    Swiss banking is often identified in America with
               banking secrecy.  Popular media stories have created
               two contradictory pictures: that Swiss secrecy hinders
               law enforcement officers from prosecuting criminals,
               while others claim that Swiss secrecy does not exist
               anymore and is as full of holes as a Swiss cheese.
               Neither is true.
                    The basic position in Swiss civil law is that the
               information concerning a customer and the customer's
               financial dealings is protected as part of the
               individual's legal right to privacy.  In Switzerland,
               this has been made part of Article 28 of the Swiss
               Civil Code, and not only protects the information, but
               makes the person violating the secrecy liable to pay
               damages to the customer.  In addition, the banking law
               makes it a criminal offense in Switzerland for a banker
               to divulge information about a customer in violation of
               the law, punishable by fine or imprisonment.  Both the
               bank and the bank employee may be subject to various
               penalties if a violation occurs.
                    A bank can only disclose information when
               authorized to do so under existing statutory provisions
               or by a Swiss court order, which must be founded on
               law.  Secrecy is interpreted so broadly that it is
               illegal for a bank to say whether or not a person is a
               customer, since if the bank failed to do so it would be
               implying that the person was a customer.
                    The right of secrecy is a right belonging to the
               customer, not the bank.  It is the customer's privacy
               that is protected by law.  The customer can waive the
               secrecy, but the bank cannot.  For example, the
               customer may waive secrecy and ask the bank to give a
               credit reference to a specific creditor.  But such a
               waiver is only valid if the customer acts voluntarily
               and not under duress.  Therefore, waivers that were
               signed pursuant to foreign court orders compelling a
               customer to sign a waiver may well be invalid.    A
               financial institution cannot ask the government for an
               order waiving secrecy.  Only the customer can waive the
               secrecy.
                    Contrary to an opinion current in America, Swiss
               secrecy is not absolute.  It can be overridden by
               statutory provisions which compel the giving of
               information.
                    Such rules requiring disclosure of information --
               usually with a limited scope -- can be found in Swiss
               inheritance law (you really wouldn't want your
               legitimate heir going into the insurance company with
               your death certificate to be told they can't tell him
               anything), in enforcement of judgments from creditors,
               in bankruptcy or in divorce.
                    The most widely known limitation on secrecy is in
               treaties concerning Swiss cooperation in foreign
               criminal matters.
                    In a criminal investigation conducted in
               Switzerland, of a Swiss crime committed by a Swiss
               citizen, secrecy can be lifted by court order.  The
               treaties extend this possibility to foreign crimes by
               foreign citizens in foreign investigations, but only in
               the limited circumstances spelled out in the treaties.
                    Before a foreign legal assistance request for
               Swiss financial records can be honored the following
               conditions must be met:
                    1)  Compulsory disclosure is only possible if the
               offense that is being prosecuted is punishable as a
               criminal offense in both countries (the requesting
               state and Switzerland).
                    2)  In tax cases assistance is available to
               foreign prosecutors only if the investigated violation
               of foreign tax laws would be qualified under Swiss law
               as a tax fraud and not merely as tax evasion.  Tax
               evasion is simply the failure to declare income or
               assets for taxation.  Tax fraud is distinguished by the
               fact that "fraudulent conduct" is involved.  Normally
               "fraudulent conduct" can only be assumed if forged
               documents are used.
                    There is a special provision of the Swiss-United
               States Treaty on Mutual Assistance in Criminal Matters
               that provides Swiss legal assistance to U. S.
               prosecutors even in tax evasion cases if they are
               conducting an investigation against an organized crime
               group.
                    3)  As a general rule, the information obtained in
               Switzerland through a legal assistance procedure may
               not be used for investigative purposes nor be
               introduced into evidence in the requesting state in any
               proceeding relating to an offense other than the
               offense for which assistance has been granted.
                    It must be emphasized that foreign authorities or
               foreign courts cannot directly ask a Swiss financial
               institution for information. Even in cases in which
               legal assistance can be granted and therefore secrecy
               is lifted, only a Swiss court order - which in these
               cases is based upon a foreign request for legal
               assistance - can validly lift secrecy.
                    Considering this, it can be said that secrecy is
               strict and is only put aside in case clearly defined by
               Swiss law and pursuant to Swiss rules.  Secrecy is,
               however, not absolute and does therefore not protect
               criminals.
                    Switzerland has long served as a magnet for the
               money of wealthy foreigners who perceive the world as
               buffeted by over-taxation, over-regulation and
               political turmoil. They are attracted, of course, by
               the confidentiality and discretion that have been a
               hallmark of Swiss bankers since the French Revolution,
               when they offered financial refuge to French
               aristocrats. In 1934 secrecy was enshrined into law.





                                 Insurance Annuities

                    Swiss annuities minimize the risk posed by U. S.
               annuities.  They are heavily regulated, unlike in the
               U.S., to avoid any potential funding problem.  They
               denominate accounts in the strong Swiss franc, compared
               to the weakening dollar.  And the annuity payout is
               guaranteed.
                    Swiss annuities are exempt from the 35%
               withholding tax imposed by Switzerland on bank account
               interest received by foreigners.  Annuities do not have
               to be reported to Swiss or U.S. tax authorities.  They
               are not a foreign financial account for the purpose of
               U.S. reporting requirements.
                    A U.S. purchaser of an annuity is required to pay
               a 1% U.S. federal excise tax on the purchase of any
               policy from a foreign company.  This is much like the
               sales tax rule that says that if a person shops in a
               different state, with a lower sales tax than their home
               state, when they get home they are required to mail a
               check to their home state's sales tax department for
               the difference in sales tax rates.
                    The federal excise tax form (IRS Form 720) does
               not ask for details of the policy bought or who it was
               bought from -- it merely asks for a calculation of 1%
               tax of any foreign policies purchased.  This is a one
               time tax at the time of purchase; it is not an ongoing
               tax.  It is the responsibility of the U. S. taxpayer,
               to report the Swiss annuity or other foreign insurance
               policy.  Swiss insurance companies do not report
               anything to any government agency, Swiss or American --
               not the initial purchase of the policy, nor the
               payments into it, nor interest and dividends earned.
                    Earnings on annuities during the deferral period
               are not taxable in the U.S. until income is paid, or
               when they are liquidated, following exactly the same
               tax rules as for annuities issued by U.S. insurance
               companies.
                    Swiss annuities can be placed in a U. S. tax-
               sheltered pension plans, such as IRA, Keogh, or
               corporate plans, or such a plan can be rolled over into
               a Swiss-annuity.  (To put a Swiss annuity in a U.S.
               pension plan, all that is required is a U.S. trustee,
               such as a bank or other institution, and that the
               annuity contract be held in the U.S. by that trustee.
               Many banks offer "self-directed" pension plans for a
               very small annual administration fee, and these plans
               can easily be used for this purpose.)
                    Investment in Swiss annuities is on a "no load"
               basis, front-end or back-end.  The investments can be
               canceled at any time, without a loss of principal, and
               with all principal, interest and dividends payable if
               canceled after one year.  (If canceled in the first
               year, there is a small penalty of about 500 Swiss
               francs, plus loss of interest.)
                    A new Swiss annuity product (first offered in
               1991), SWISS PLUS, brings together the benefits of
               Swiss bank accounts and Swiss deferred annuities,
               without the drawbacks -- presenting the best Swiss
               investment advantages for American investors.

                    SWISS PLUS, is a convertible annuity account,
               offered only by Elvia Life of Geneva.  Elvia Life is a
               $2 billion strong company, serving 220,000 clients, of
               which 57% are living in Switzerland and 43% abroad.
               The account can be denominated in the Swiss franc, the
               U.S. dollar, the German mark, or the ECU, and the
               investor can switch at any time from one to another.
               Or an investor can diversify the account by investing
               in more than one currency, and still change the
               currency at any time during the accumulation period --
               up until beginning to receive income or withdrawing the
               capital.
                    If you are not familiar with the ECU, it is the
               European Currency Unit, a new currency created in 1979.
               It is composed of a currency basket of 11 European
               currencies, and its value is calculated daily by the
               european Commission according to the changes in value
               of the underlying currencies.  The ECU is composed of a
               weighted mean of all member currencies of the European
               Monetary System.  Since the ECU changes its balance to
               reflect changes in exchange rates and interest rates
               between these currencies, the ECU tends to limit
               exchange rate risk and interest rate risks.
                    Although called an annuity, SWISS PLUS acts more
               like a savings account than a deferred annuity.  But it
               is operated under an insurance company's umbrella, so
               that it conforms to the IRS' definition of an annuity,
               and as such, compounds tax-free until it is liquidated
               or converted into an income annuity later on.
                    SWISS PLUS accounts earn approximately the same
               return as long-term government bonds in the same
               currency the account is denominated in (European
               Community bonds in the case of the ECU), less a half-
               percent management fee.
                    Interest and dividend income are guaranteed by a
               Swiss insurance company.  Swiss government regulations
               protect investors against either under-performance or
               overcharging.
                    SWISS PLUS offers instant liquidity, a rarity in
               annuities.  All capital, plus all accumulated interest
               and dividends, can be freely accessible after the first
               year.  During the first year 100% of the principal is
               freely accessible, less a SFr 500 fee, and loss of the
               interest.  So if all funds are needed quickly, either
               for an emergency or for another investment, there is no
               "lock-in" period as there is with most American
               annuities.
                    Upon maturity of the account, the investor can
               choose between a lump sum payout (paying capital gains
               tax on accumulated earnings only), rolling the funds
               into an income annuity (paying capital gains taxes only
               as future income payments are received, and then only
               on the portion representing accumulated earnings), or
               extend the scheduled term by giving notice in advance
               of the originally scheduled date (and continue to defer
               tax on accumulated earnings).

                    According to Swiss law, insurance policies --
               including annuity contracts -- cannot be seized by
               creditors.  They also cannot be included in a Swiss
               bankruptcy procedure.  Even if an American court
               expressly orders the seizure of a Swiss annuity account
               or its inclusion in a bankruptcy estate, the account
               will not be seized by Swiss authorities, provided that
               it has been structured the right way.
                    There are two requirements: A U. S. resident who
               buys a life insurance policy from a Swiss insurance
               company must designate his or her spouse or
               descendants, or a third party (if done so irrevocably)
               as beneficiaries.  Also, to avoid suspicion of making a
               fraudulent conveyance to avoid a specific judgment,
               under Swiss law, the person must have purchased the
               policy or designated the beneficiaries not less than
               six months before any bankruptcy decree or collection
               process.
                    These laws are part of fundamental Swiss law.
               They were not created to make Switzerland an asset
               protection haven. In the Swiss annuity situation, the
               insurance policy is not being protected by the Swiss
               courts and government because of any especial concern
               for the American investor, but because the principle of
               protection of insurance policies is a fundamental part
               of Swiss law -- for the protection of the Swiss
               themselves.  Insurance is for the family, not something
               to be taken by creditors or other claimants.  No Swiss
               lawyer would even waste his time bringing such a case.

               Contact information
                    The only way for North Americans to get
               information on Swiss annuities is to send a letter to a
               Swiss insurance broker. This is because very few
               transactions can be concluded directly with foreigners
               either with a Swiss insurance company or with regular
               Swiss insurance agents.
                    When you contact a Swiss insurance broker, be sure
               to include, in addition to your name, address, and
               telephone number, your date of birth, marital status,
               citizenship, number of children and their ages, name of
               spouse, a clear definition of your financial objectives
               (possibly on what dollar amount you would like to
               receive), and whether the information is for a
               corporation or an individual, or both.
                    One firm specializes in dealing with English
               speaking investors, and everybody in the firm speaks
               excellent English.  They are also familiar with U. S.
               laws affecting the purchase of Swiss annuities.
               Contact:  Mr. Jurg Lattmann. JML Swiss Investment
               Counsellors AG, Dept. 212, Germaniastrasse 55, 8031 Zurich,
               Switzerland; tel. (41-1) 363-2510, fax: (41-1) 361-074.






                                WHY SWITZERLAND?


                    Switzerland has long served as a magnet for the
               money of wealthy foreigners who perceive the world as
               buffeted by over-taxation, over-regulation and
               political turmoil. They are attracted, of course, by
               the confidentiality and discretion that have been a
               hallmark of Swiss bankers since the French Revolution,
               when they offered financial refuge to French
               aristocrats.
                    Banking in Switzerland, a land of few natural
               resources, has been immensely lucrative. Operating in a
               country less than half the size of Maine, Swiss banks
               control more than $400 billion in assets, making the
               country the third-largest financial center in the
               world.
                    For people with money to protect -- whether a
               little or a lot -- Switzerland is traditionally
               considered the world's safest repository. These days,
               the Swiss can give Americans many reasons to leave
               funds in Switzerland  But the promise of total secrecy
               in financial matters remains one of the greatest
               attraction of Swiss banks.




                                 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.
