Switzerland: Swiss securities transfer tax – No new treatment for Swiss fund managers
Recent statements made by experts from the Swiss Federal Tax Administration (SFTA) towards Swiss fund managers and banks appeared to suggest that there is a new practice in place.
There is no new practice. The issue is that Swiss collective investment schemes are exempt investors for Swiss securities transfer tax (SSTT) purposes, whereas Swiss fund management companies are not. If the fund management company holds brokerage accounts with banks in its own name but for the account of the collective investment scheme, it becomes the counterparty in the transaction for SSTT purposes and the bank/broker has to levy half of the SSTT if the fund management company does not identify itself as a Swiss securities dealer (SSD).
To avoid the issue, affected fund managers must ensure that the relevant accounts are always opened directly in the name of the collective investment scheme and not in the name of the fund management company. Alternatively, the fund management company identifies itself as an SSD towards the bank/broker by providing its blue SSD card and therefore becomes responsible for recording the transaction in its SSTT journal.
In both cases, no SSTT on transactions for the benefit of the collective investment scheme will be levied. However, under the second option, the burden of keeping a journal lies with the fund management company. A fund management company may request the SFTA to keep a simplified journal in order to avoid unnecessary administrative burdens. Outsourcing the journal maintenance back to the bank/broker is allowed, but the entries must show the collective investment scheme as party to the transaction, not the fund management company.
In essence, the correct formal setup is key when dealing with SSTT as there is no room for a substance-over-form approach.
Markus Weber (firstname.lastname@example.org) and André Kuhn (email@example.com)
Tel: +41 58 279 7527 and +41 58 279 6328