Swiss independent asset manager PILOTAGE has marked its fifth birthday by rolling out a family office consulting practice aimed at clients wrestling with US extra-terrorial tax powers.

While some financial institutions no longer serve US residents or expat Americans because they are seen as a compliance burden, there continue to be firms which see this population group as a serious opportunity. An example is Switzerland’s independent asset management firm PILOTAGE.

The company, which is registered with the US Securities and Exchange Commission, and has just marked its fifth birthday, has rolled out a family office consulting practice to give strategic advice to family offices and family-run companies around governance, organisational and investment issues where US extra-territorial tax powers arise.

Since FATCA Act [Foreign Account Tax Compliance Act] was enacted four years ago – and taking effect over a period of years – it has prompted some major organisations such as HSBC and Deutsche Bank to stop offering financial services to US persons. The act requires all financial institutions outside of the US to regularly submit information on accounts held by US persons to the US Internal Revenue Service. Those who are not compliant will suffer a 30 per cent withholding tax on income and gross proceeds, as of January 2015.

And as Swiss firms such as UBS have been punished for allowing US citizens to evade tax in recent years, it would be easy to assume that Swiss institutions would take the path of least resistance and avoid any contact with US expats. But that is not how PILOTAGE sees it.

Yann Rousset, PILOTAGE’s chief executive officer, explained to this publication why the family office consulting practice is being set up: "It will implement procedures to reduce unforced errors, provide best practice principles and disciplined governance under FATCA.”

The new service has a dedicated team, headed by Bill Dubois, managing director.

PILOTAGE, which oversees $850 million in assets under management, says it is the largest, purely independent, SEC-registered external asset manager of its kind in Switzerland. Although such businesses have seen growth in the Alpine state – there are around 50 of them now – they still only account for a tiny fraction of the total asset manager population in the country, at around 1 per cent, PILOTAGE says.

Having a SEC licence and being able to advise and help US persons and American expats over issues surrounding FATCA is a key selling point for such a business, Rousset said.

"This FATCA issue goes much deeper than reporting or legal issues but about how you operate and govern a firm," he said. Rousset says PILOTAGE has an insight into such issues, as its employee/owners consists of US persons, experiencing first-hand why its client’s seek such advice.

Rousset said there are a number of family offices already signed for PILOTAGE’s new family office consulting practice. Given the tighter rules, family offices want long term, dependable solutions that do not exclude US persons from family organisations or businesses.

It is not acceptable for families to just assume that they won’t be affected by FATCA and similar rules, Rousset said. At least by the third generation, almost "every such family is going to have a US person exposure of some kind", he said. It would be impossible to estimate the magnitude of the issue though it is clearly a priority and only becoming more of a focus as private organisations look towards the future. There are practical issues around travel & documentation, signatory powers, family conflict and the like that fall outside the legal/tax categories but are more operational/governance issues, he said.