Swiss Securities Transfer Tax - Home - Ernst & Young - Schweiz

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S WISS S ECURITIES T RANSFER T AX • The securities must have actually been traded at that foreign stock exchange. This second condition applies to on-exchange trades (in case of virt-x: “order book trades”) as well as to offexchange trades and own-name transactions (“off order book trades”) provided the latter must be reported to the foreign exchange based on the pertinent rules and regulations of such foreign exchange. i) Remote Members of SWX If a remote member of SWX transacts with an exempted party – as described above – the same rules apply as for a Swiss securities dealer. This means that the remote member does not need to account for transfer taxes if its customer is an exempted party. 3.2.2 Objective exemptions The following transactions are exempted from Swiss transfer taxes as well: a) Exemption of the trading account Banks and professional brokers which qualify as Swiss securities dealers can benefit of a transfer tax exemption with respect to their trading account. These parties are exempt from the tax pertaining to them to the extent they sell securities out of their trading account and they acquire securities to increase the trading account. While banks can carry a trading account per se, professional brokers other than banks have to file an application evidencing that they act as market makers on a regular basis with a greater circle of counterparties. On the other hand, all securities representing long-term participations, and all securities which are encumbered (such as serving as a collateral for a loan) cannot be carried in the trading account. A transfer of securities from the trading account to the investment account and vice versa triggers transfer taxes in the same way as would a transaction with a non-securities dealer. b) Issuance of Swiss securities and primary market transactions The issuance of corporate shares, shares in limited liability companies and co-operative corporations, participation certificates, shares in investment funds 3 , debentures and money market papers including the firm underwriting by a bank and the allocation of the securities in a 3 However, the issuance of foreign investment fund shares into Switzerland is subject to Swiss transfer tax at the usual rates applicable to foreign securities. © 2002 ERNST & YOUNG L TD 10/17
S WISS S ECURITIES T RANSFER T AX subsequent issue are exempt from transfer tax. c) Cross border brokerage of foreign debentures (“Eurobonds”) Acting as a broker in a transaction involving foreign debentures (irrespective in which currency these bonds are denominated)—socalled “Eurobonds”—is exempted from transfer tax to the extent the counterparty is a foreign entity or person. By way of example: if a Swiss bank acts as a broker in foreign debentures between a UK resident company (as counterparty) and a private Swiss investor (as the bank’s client) the leg of the transaction involving the foreign counterparty is exempted while the Swiss client will be charged ½ of the transfer tax (i.e. 15 bps). d) Transfer of subscription rights and options The transfer of subscription rights, warrants and options is exempted from transfer taxes. However, if a warrant or an option is exercised, transfer tax becomes due on the exercise price which is regarded as the consideration for the transfer. Only in case of so-called LEPOs (low exercise price options, also referred to as zero-strike price options) would the market value of the shares be taken as the consideration instead of the exercise price. e) Return of securities for redemption If the redemption takes place for the purpose of cancelling the securities no transfer tax is levied. However, it is then imperative that the settlement advice must clearly state the purpose of the redemption and the actual cancellation must be evidenced upon the tax authorities’ request. f) Trade in Swiss and foreign money market papers Money market papers are Swiss or foreign debentures with a maturity of less than one year irrespective of their currency denomination. g) Transactions with foreign banks or brokers in foreign securities If a Swiss securities dealer concludes a transaction with a foreign bank or broker involving foreign securities no transfer tax would be due on the leg of the transaction between the Swiss securities dealer and the foreign bank/broker. However, if Swiss securities are subject to the transaction ½ of the transfer tax (i.e. 7.5 bps) pertaining to the foreign counterparty is due regardless of whether the transaction was concluded in Switzerland or abroad (except for Swiss securities traded at foreign exchanges; see para. 3.2.1 (h) above). The term “foreign bank or broker” basically encompasses all banks © 2002 ERNST & YOUNG L TD 11/17
Page 1 and 2: Swiss Securities S WISS S TAMP T AX
Page 3 and 4: S WISS S ECURITIES T RANSFER T AX 1
Page 5 and 6: Pension funds newly became liable t
Page 7 and 8: Whilst not all conceivable transact
Page 9: S WISS S ECURITIES T RANSFER T AX a
Page 13 and 14: Abbreviations used: SWX: Swiss Stoc
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Page 17: FALL 2002 S WISS S ECURITIES T RANS

Swiss Securities Transfer Tax - Home - Ernst & Young - Schweiz

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