Accounting

FINMA adopts new regulation implementing FinSA and FinIA

Anonymous — Thu, 19 Nov 2020 23:06:13 +0000

FINMA adopts new regulation implementing FinSA and FinIA Anonymous Fri, 11/20/2020 - 00:06

Recently The Swiss Financial Market Supervisory Authority FINMA introduced a new regulation act under which is implementing the Financial Services Act FinSA and the Financial Institutions Act FinIA. Additionally, it is also issuing a new FINMA Financial Institutions Ordinance. They are supposed to enter into force on 1 January 2021.

The main idea of the new FINMA Financial Institutions Ordinance (FMIO-FINMA) is to regulate the details of professional indemnity insurance for portfolio managers, trustees and managers of collective assets, information about calculating the de minimis threshold for gaining authorisation as a portfolio manager, and on risk management and internal control system for managers of joint assets.

FinSA and FinIA entered into force on 1 January 2020. Both acts are governing the historical business importance of fund managers and assets. The main idea is to foster investor protection and provide access to the EU financial market by establishing a material equivalence in the regulatory framework. FinSA and FinIA, together with the Federal Council's implementing ordinances, oblige FINMA to give implementing provisions on selected, mainly technical issues. As a result, it has simplified the calculation of professional indemnity insurance as against the consultation draft.

Among other advantages of a new amendment to the FINMA, it has proposed amending the client identification threshold values in its Anti-Money Laundering Ordinance (AMLO-FINMA) from CHF 5,000 to CHF 1,000 for exchange transactions in cryptocurrencies. The importance of such amendments means that from now on, KYC identification will be obligatory for those Switzerland based financial businesses who make or receive crypto transactions starting from CHF 1,000 and up.
Moreover, the gathered information must be then passed on to The Swiss Financial Market Authority for a review. Transfers below CHF 1,000 will not demand an identity verification procedure or personal details, so acquiring smaller amounts will not be a deal. FINMA noted that "Through these measures, FINMA is implementing the international standards approved in mid-2019 and acknowledging the heightened money-laundering risks in this area".

Additionally, the European Union (EU) has implemented the Fifth Anti Money Laundering Directive (5AMLD) last month, bringing certain cryptocurrency transactions under stricter regulations. In regards, the German Financial Supervisory Regulatory Authority (BaFin) released guidelines to clarify how the new law will apply to firms offering or intending to offer crypto custody services to German investors.

Sources and Articles

https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/financial-se...
https://www.finma.ch/en/news/2020/11/20201112-medienmitteilung-folgeregu...
https://tokenpost.com/Switzerland-lowers-threshold-value-for-exchange-tr...
https://sumsub.com/blog/finma-pushes-new-aml-rules-to-crypto-transactions/

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Swiss Asset Management Takes a New Turn in 2020

Anonymous — Wed, 13 May 2020 20:20:58 +0000

Swiss Asset Management Takes a New Turn in 2020 Anonymous Wed, 05/13/2020 - 22:20

From January 1, 2020. The Swiss Financial Institutions Act (FinIA) and the Swiss Financial Services Act (FinSA) entered into force, updating the regulatory regime for trustees working in Switzerland. This means that all independent portfolio managers (PMs) and trustees subject to supervision under FinIA will have to be supervised by a Supervised organisations (SO) authorised by FINMA and get licensed by FINMA before they can be able to carry out their activities as financial intermediaries in Switzerland.

The new regime is intended to strengthen the overall reputation and competitiveness of Switzerland as a financial centre, at the same time improving the quality, integrity and accountability of the Swiss trust industry. A particularly important point of innovation is the inclusion of trustees in the concept of “financial institutions.”

How it was before and what changes?

Previously known as asset managers, portfolio managers were required to comply with anti-money laundering (AML) regulations and be affiliated with a self-regulatory organization (SRO) in order to oversee compliance with AML requirements and industry standards. However, they operated without a license and no supervision from the Swiss Financial Market Authority (FINMA).

However, according to the new ammendments, asset managers that fall within the scope of FinIA activities will be subject to regulatory oversight must be authorized to carry out their activities in addition to meeting the structural, organizational, business and audit requirements. It's only after obtaining such a license that the asset managers will be able to register with the Commercial Register and get off the ground.

How the new law defines portfolio manager and trustee

A portfolio manager is a person mandated to manage assets on a commercial basis in the name of and on behalf of clients, and may dispose of clients' assets in any other manner (Art. 17 FinIA). Portfolio managers manage individual portfolios.

Thus, according to the law, the asset manager is based on two criteria:

(i) the power of disposal over assets of clients and

(ii) the commercial nature.

The authority to dispose of the assets must result from a corresponding order of the customer. This refers to a management mandate granted to the financial service provider.

The second criteria is commerciality according to FinIA is fulfilled if a financial service provider either:

- Has a gross income of more than CHF 50'000 per year;

- Maintains a business relationship with more than 20 contracting parties per year or 20 contracting parties which are not limited to a single activity; or

- Possesses power of disposal over third-party assets of more than CHF 5 million.

Any financial services provider who meets the two criteria (power of disposal over client assets as well as professionalism), qualifies in principle as an asset manager pursuant to Art. 17 para. 1 FinIA and is therefore considered a financial institution.

Asset managers are also considered as managers of collective assets. They manage the assets of collective investment schemes or occupational pension schemes below the defined thresholds (see Art. 24 para. 2 FinIA) and are deemed to be portfolio managers.

Initially business activities as trustees were not previously regulated, apart from the AMLA provisions which had to be observed.

A trustee is a person who on a commercial basis manages or disposes of a separate fund for the benefit of a beneficiary or for a specified purpose based on a restricted grant given namely in the instrument creating a trust. All this should be in accordance with the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and Their Recognition. The trustee manages the separate fund, and ensures its value is maintained and employed in a restricted manner.

The second relevant criterion, the professionalism, is basically the same as that for the asset manager only if, with regard to Business volume the threshold values according to FinIA are achieved. The amount of assets under management, do not constitute third-party property under civil law.

According to the the Hague Trust Convention, foreign trusts are legally recognized in Switzerland.

MAIN DEADLINES

Other deadlines and obligations:

Financial institutions must affiliate to an ombudsman's office within six months of the Federal Department of Finance recognizing or establishing for them an ombudsman`s office in accordance with Article 84 FinSA.
During one year after approval of SO by FINMA, PMs and trustees starting activity during 2020 to affiliate with SO and file a licensing application with FINMA according to Article 74(3) FinIA. They can continue to operate until a decision is reached regarding their authorisation—provided that they are affiliated to an SRO, as defined in Article 24 AMLA, and are supervised by this SRO in relation to compliance with the relevant requirements.

How to get authorisation?

FINMA has opened a new online instrument to fulfil the authorisation requirements. Supervised institutions and their audit firms as well as supervisory organisations can use the web-based survey and application platform (EHP) to submit encrypted supervisory data and authorisation applications to FINMA electronically.

The FINMA portal is the central entry point for using the survey and application platform. To access the FINMA portal, users from the institutions must first register. After registering successfully, users can log in to the FINMA portal with two-factor authentication. The institutions must provide FINMA with the name of at least one authorisation coordinator before they can use the platform. This person may authorize other people from the institution to use EHP.

User guides are available to view on the FINMA’s website.

Conclusion

The new legal framework for financial institutions represents a new legislative age for trustees working in Switzerland and thus creates new steps of authorization in the field of regulation and administration. The good news is that that these procedures will lead to new opportunities that will take the Swiss trust industry to a whole new level.

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Tax deductions in Switzerland

Anonymous — Sat, 23 Nov 2019 02:06:44 +0000

Tax deductions in Switzerland Anonymous Sat, 11/23/2019 - 03:06

The calculation of the tax rates in Switzerland is based on the net income of the taxpayer. Like in most other European countries, there are several tax deductions that can be made when a tax declaration is filed in Switzerland. These will reduce the taxable income and consequently the value of tax that needs to be paid diminishes significantly.

Direct federal tax levy charge is charged at the same rate throughout Switzerland, regardless of the canton. However, deductions on cantonal and communal levels are regulated differently depending on the requirements of each canton. The variations in local tax rates in cantons is something that should be taken into consideration when deciding where to open a company in Switzerland. You can easily find all the information about each canton’s tax rates on their respective websites.

In order to claim any of the available tax deductions, the necessary supporting paperwork must be submitted together with the tax return. Here are some of the most frequently used legal tax deductions that comply with the existing tax regulatory laws.

Work related expenses
Employees are allowed to deduct work related expenditure costs, such as the cost of commuting to work. Bus and train passes (up to a certain limit) are included under commuting expenses. Bicycles, mopeds and scooters have a flat amount. In certain cases, the kilometers driven to and from the workplace can be deducted when a private vehicle is used, however, there are limits set for minimum and maximum distances which qualify for this category.

Other expenses include the cost of meals during the workday. Provided that the employee is not able to go home for lunch, these expenses may be deducted from the income of the employee. The amount deducted varies from canton to canton. Additional deductions are possible for night shifts.

Other work related expenses, which include, however not limited to the cost of specific clothing, tools or other professional requirements, have been allocated a flat rate deduction. If the costs are higher than the flat rate deduction and these costs can be proven, the taxpayer may also deduct them. In this case, it is recommended to attach receipts to the tax declaration.

Interest payments
Interest rates charged, such as mortgages or interest on loans, may be deducted from the income of the employee. This deduction applies only to interest, and is not applicable for repayment of principal amount used to reduce a loan (for example, amortization of a mortgage). Leasing costs on cars may be deducted only if the taxpayer is classified as self employed.

Withholding taxes
Interest rate values credited to bank or savings accounts can not exceed 65% of the acrued value in an account. In most cases, the banks automatically transfer 35% of the interest to the tax authorities. If the taxpayer provides the account numbers on the tax declaration, then withholding tax is reimbursed. The withholding tax is applied only to accounts for which the amount of interest is higher than 200 CHF.

In addition to interest acrued from accounts, interest from other sources such as bonds, lottery winnings starting at 50 CHF and dividend payments are subject to the withholding tax, but they can often be adjusted to the individual’s marginal tax rate.

Other tax deductions
Donations to non – profit organizations are also subject to tax deductions. The same applies to charitable donations, the charity is liable for tax deduction if it is registered in Switzerland and its minimum donation is 200 CHF. In some cases, the value of deductions applied to charitable donations can be up to 20% of the total amount donated.

Deductions for taxes paid in advance
The tax authorities pay interest on tax payments made in advance. The interest rate is generally higher than the interest rates associated with banks. Even if a partial sum is paid from the full – year taxes, it is possible to benefit from significant tax deductions.

Keep in mind that this information does not replace a solid tax planning strategy that can significantly help any company or entrepreneur doing business in Switzerland benefit from tax deductions.

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2019 Corporate tax rates in Swiss cantons

Anonymous — Sun, 17 Nov 2019 18:17:34 +0000

2019 Corporate tax rates in Swiss cantons Anonymous Sun, 11/17/2019 - 19:17

The Swiss government has gone the extra mile in leveraging low corporate tax rates as a competitive advantage. In Switzerland, corporate tax rates vary depending on the canton where you are operating your business.

Cantons are administrative units with a high level of autonomy compared to the central government—they competitively offer low tax regimes in order to attract large multinational companies. Between the Swiss cantons is a continuous "fiscal struggle" for the lure of big investors

For a long time, the winner of this inter-cantonal battle has been the canton of Zug, which managed to attract so many corporations that it began to have problems with "accommodation space." The canton is home to the general or regional headquarters of big corporations like Johnson & Johnson, Burger King Holdings Inc, and Siemens AG among many others.

At present, both established and new businesses can enjoy the lowest corporate tax rates in Switzerland in the canton of Lucerne(11.3%)

The tax regime in light of the reform
Two years ago, the Swiss rejected a similar idea to reform corporate tax. However, they have recently largely accepted new tax provisions in order to achieve international acceptance. The key objective of the tax reform is to eliminate the preferential tax regimes for holdings, domicile and mixed companies within the cantons.

Switzerland is home to over 24,000 international companies. This is a result of the low tax rates provided by its 26 cantons with their own competitive rates, in addition to the federal income tax rate of approximately 8%. In Zug, alone, the canton of Zurich, there are approximately 1,800 multinational companies, including global commodity traders, pharmaceutical giants and a group of blockchain and cryptocurrency firms.
Switzerland has an average effective tax rate of less than 20% when federal and cantonal taxes are combined. In the case of large companies, the negotiations made with the cantons can even reduce up to 9%.

Regarding legal security and investor confidence, the tax reform pursues three objectives:

To protect the tax appeal of Switzerland as a business location
Promote the acceptance of international corporate tax law
Ensure sufficient tax revenues to finance public activities.

Notwithstanding, attractive tax rates will remain a natural strength in Switzerland.
The Swiss tax system aims to comply with the minimum international standards, and yet remain an attractive location for multinational companies.

Corporate tax rate reductions
Following the abolition of the preferential tax regimes, the multinationals are subject to taxation at the usual corporate rates for cantonal and communal taxation purposes. Currently, effective tax rates range from 12% to 24%. But the cantons announced a reduction in the corporate tax rates for all companies, considering that the reform could lead to a substantially higher tax burden.
Thus, the canton of Lucerne proposed effective tax rates between 11.27% and 14%, and the three major cantons, Zurich, Bern, and Aargau, between 16 and 20%. Also, the corporate taxation in the canton of Zug across all levels drops to 11.91% (so far 14.35%). Our consultants can provide you with all the information you need regarding the measures planned in the other cantons.

Tax measures at cantonal level
As of January 1, 2020, the cantons must implement some mandatory tax provisions, in addition to the elimination of preferential tax regimes. For companies that lose their preferential tax status, a special low tax rate should be implemented for a step-up in the tax base. This serves as a smooth transitional measure. Furthermore, the patent box must be introduced, as well as a neutral step-up tax of hidden reserves upon migration to Switzerland.

The cantons may also opt for several voluntary tax measures, such as a super deduction for research and development costs. Also, a notional interest deduction can be implemented for cantons that have an effective tax of more than 18%, such as the canton of Zurich. Another voluntary measure that can be introduced is a reduced annual capital tax on net equity related to investments, patents and comparable rights as well as intra-group loans. Furthermore, it may be of interest to multinationals that, now, a Swiss permanent establishment of a non-Swiss company could apply for a tax credit of the residual non-Swiss withholding taxes.

It should be specified that the reduction of the cantonal tax rates on profit and the voluntary measures of taxation will be subject to a public vote or must be approved by the relevant cantonal council.

The cantonal governments have launched official announcements and it’s anticipated that most Swiss cantons will provide attractive tax rates for all companies: 12% -14% applicable to pre-tax income (including federal income tax).

Thus, Switzerland will remain a low-tax centre for big companies. The referendum on approving the overhaul of corporate income taxes will not change this.

In terms of Swiss competitiveness worldwide, the country retains its position in the first third, Hong Kong and Singapore, plus the traditional offshore domiciles remain the clear leaders in terms of fiscal appeal outside of Europe.

This year, Switzerland had a lower average tax rate overall, mainly due to cuts in the cantons Basel-Stadt and Vaud. These cantons have brought some movement in the situation of the corporate tax rate for companies. Moreover, they could be the first signs of a trend that could lead to fundamental changes in the Swiss corporate tax landscape shortly.

Lightly fiscal policy is Switzerland's most important asset, but the developed university environment, the public sector efficiency and the highly appreciated legislation in the field of intellectual property rights are also worth considering. Our company closely follows the process of fiscal reform, both from a political and economic perspective. Thus, our experts can provide periodic and comprehensive information on current discussions and may examine your company's tax planning in the context of tax reform.

For more details and assistance regarding taxes in Switzerland, you can reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.

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Banking and finance in Switzerland

Anonymous — Wed, 13 Nov 2019 16:16:57 +0000

Banking and finance in Switzerland Anonymous Wed, 11/13/2019 - 17:16

The Swiss banking sector is key in strengthening the swiss economy. Switzerland is well known for its diversified financial services, privacy and sophistication. Swiss banks are actively engaged in a range of activities, in relation with both the private and commercial domain. At present, Switzerland is one of the leading countries in private banking.

Swiss banking
The Swiss central bank is regulated by the Swiss National Bank (SNB). The Union Bank of Switzerland and Credit Suisse are the two major banks in the country.

The Swiss regulatory system
Switzerland is not a member of the European Union, neither is it a participant of the European Economic common area. Therefore, it’s not bound by the European Legislation. This means that Switzerland has the autonomous and sovereign right to regulate its own financial services industry.

Legal forms of banking regulation in Switzerland
Banking regulatory legislation can be expressed in various legal forms. The fundamental principles in Switzerland are included in the federal legislation, while concrete details are set out by government ordinances. Federal legislation documents include:

The Banking Act;
The Stock Exchange Act;
The Financial Market Supervision Act.

In addition to these regulations, there are other ordinances and circulars issued by the Swiss Financial Market Supervisory Authority (FINMA). These include self directory guidelines, directives and recommendations issued by the Swiss financial sector. It’s important to note that, the Swiss Bankers Association issues all these only under the supervision of FINMA.

Swiss Financial Market Supervisory Authority
FINMA is the major organization responsible for the regulation of banks and financial markets in Switzerland. FINMA works as an independent federal regulatory authority, employing a dualistic supervisory system to monitor and inspect the audit companies execute and the special inspections commissioned by the authority.

SIX Swiss Exchange
Certain aspects regarding securities brokering, such as the organization of trading, are subject to self – regulation through the SIX Swiss Exchanges engendered under the overall supervision of FINMA (through the Swiss Banking Association). The SIX Swiss Exchange also ensures compliance with the regulatory framework for securities insurance and trading, monitoring and enforcing compliance with these regulations.

Supervision of security dealers
FINMA’s supervisory activities draw heavily on the work of audit firms that are delegated to conduct regular audits in certain institution sectors. Thus it can provide direct supervision. The Supervision of Wealth Management Banks and Securities Dealers and the Supervision of Retail, Commercial and Trading Banks departments are responsible for monitoring security dealers, banks and other mortgage bond institutions.

Institutions that form an economic unit with other legal entities in the financial sector are also monitored on a constant basis as part of the supervision of financial services groups.

Corporate bank accounts
Any company can open a Swiss bank account, whether it has a registered office located in Switzerland or not.

Companies that conduct commercial, services and manufacturing activities are listed in the Swiss Commercial Register, therefore they must provide the bank with a relevant extract from the register.

Companies that are not listed in the Swiss Commercial Register or that don’t have a registered office in Switzerland must provide the bank with an extract from the Register of commerce or other equivalent documents, in order to allow the bank to identify the company. This is necessary so that the bank confirms the entity's existence and identifies its legal representatives. The same requirements apply to Swiss companies that don’t operate an official Register of commerce. In both cases, the documentation should not be older than 12 months at the time of submission.

Domiciliary companies are companies that don’t conduct any operational activities and don’t have any physical premises or personnel in Switzerland. They can be Swiss or foreign companies. These companies are entitled to declare the identity of the beneficial owners by submitting a special form (form A).

For more details and assistance regarding banking and finance in Switzerland, you can reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.

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Accounting Services in Switzerland

Anonymous — Fri, 30 Jun 2017 04:38:07 +0000

Accounting Services in Switzerland Anonymous Fri, 06/30/2017 - 06:38

The economic stability of Switzerland is one of the most known facts about the country. Due to its taxation system, geographic and political position, low inflation, low unemployment rate as well as its competitive business environment, Switzerland has become a preferred destination for investors.
But in order to ensure the best development of a foreign capital company, quality accounting and bookkeeping services are required.
Accounting service in Switzerland
In Swiss, the Accounting Law specifies that Companies generating revenue of less than CHF 500’000 in the last financial year are required to maintain simplified accounting with the presentation of a statement of receipts/income and payments/expenses. Sole proprietorships and partnerships generating revenue of at least CHF 500’000 in the last financial year are required to keep accounts and present annual financial reports.
Since the Accounting Law is permanently changing, the best option for an investor to have its bookkeeping and benefit from the double taxation is to have its accountability done by an expert in the Swiss law. Our firm offers bookkeeping services and financial consulting for a large category of small and medium – sized companies from various industries.
Accounting standard
Switzerland is not a member of the European Union and, therefore the EU IAS Regulation or Accounting Directives do not apply, but rather IFRSs or US GAAP. Swiss GAAP is permitted mainly for Swiss companies listed on the main board that are not multinational.
IFRS (International Financial Reporting Standards) is an accounting standard that has gained international recognition. Its main target is to give a true and fair view of the financial positions of the company and therefore prohibits the recognition of unjustified provisions. It is an accounting standard recognized in Switzerland, in addition to Swiss GAAP FER and US GAAP. IFRS is to be distinguish by their large volume of disclosures, the preparation of a cash flow statement as well as differences in the valuation of a certain number of items.
Swiss GAAP FER is an accounting framework that is much lighter when compared to IFRS. As such, it significantly reduces the cost for the business. Therefore, Swiss GAAP FER are much easier to deploy in an SME than IFRS.
Audit services in Switzerland
Audit is used to identify potential problems in time that will lead to improved decision-making process and reduction of costs. They also serve to provide credible information about a specific corporation or company to potential business investors, business partners, banks or government agencies. All audit firms operating in Switzerland need to be registered with the Federal Supervisory Authority of Audit Firms in Bern.
Starting 2008, the Audit Law requires that all legal entities except for sole traders and Swiss partnerships must have their accounts audited. The new Swiss Audit Law establishes different audit requirements depending on the type of company.
For Swiss companies listed on the Stock Exchange, companies with a minimum annual turnover of 20 million CHF, companies or with a balance sheet of at least 10 million CHF or with 50 full-time employees on an annual basis, the regular audit applies. Limited audits apply to all types of Swiss companies that are not subject to regular audits. Companies with less than 10 full-time employees may opt for not having their accounts audited if the Swiss shareholders decide so. For other types of legal entities, such as cooperatives, associations and foundations, the main audit requirements are as set out in the Swiss Commercial Code.
Our team of authorized audit experts provides audit services such as limited audits, ordinary audits or revisions, revisions in order for capital increases or reductions and business start-ups, compliance for money laundering law.
Tax consultancy in Switzerland
To understand the Swiss tax system, it is important to understand there are different tax levels. Swiss taxes are levied by the confederation, the 26 cantons and approximately 2,300 municipalities.
Any company with a registered office or administration in Switzerland is liable for unlimited Swiss tax, while foreign companies abroad are liable for limited taxation, only if they hold real estate or a permanent establishment in Switzerland.
Increased corporate tax and regulatory reporting requirements can be a drain on management time. This is why having all the accountability done by a team of experts, like ours is the best option.
Company Management in Switzerland
All the accounting processes involved in the corporate administration field ensure the efficiency and the productivity of any type of company and can vary for each company depending on the type of industry. Our team of accountants is constantly updating to our clients’ needs, as we have the experience of serving a wide range of legal entities, including statutory duties associated with all business processes.
Payroll services assistance in Switzerland
Processing payrolls for Swiss employees, completion of statutory forms, including yearend returns, monitoring of staff costs are activities that can be done by our team of professionals.
Our team of professionals is ready to assist entrepreneurs and businesses alike to focus on expansion and growth while we handle the legal, accounting and back-office hassles when expanding to a country in which we’re present.