One year later - How was the stamp tax decision implemented
Corporates & Transactions
Banking / Insurance
Transactions / M&A
Just over a year ago, the Federal Supreme Court issued the landmark decision concerning the documentation of counterparties for Swiss stamp tax purposes. How did the market participants implement this decision in practice?
Slightly more than one year ago, the Federal Supreme Court (“Court”) issued the landmark decision (“Decision”) concerning Swiss stamp transfer tax (2C_749/2017, 2C_753/2017). The following three elements were part of the Decision (1) required identification of Swiss stamp tax securities dealer (“Securities Dealer”) (2) direct proxy relationships and (3) relevance of information in Swiss stamp tax journal.
Identification of Securities Dealers
The Court concluded that all Securities Dealer (other than banks) must prove their status as a Securities Dealer by means of a valid identification documentation, the so-called Blue Securities Dealer Card (“Blue Card”).
The requirement that a Securities Dealer must pay one-half of the Swiss stamp transfer tax for another Securities Dealer is waived only if that other Securities Dealer provides its Blue Card either: (1) at the time of concluding the relevant transaction, or (2) at the latest, three days after the transaction date. Any other form of identification as a Securities Dealer or a late attempt for “retroactive identification” as a Securities Dealer with presentation of the Blue Card is null and void.
Direct proxy relationships
The Court affirmed that the legal form of the transaction is relevant for Swiss stamp transfer tax purposes. When one party (a representative) acts in the name and on behalf of another (represented) party and places orders to trade securities with a Securities Dealer, the transaction would be treated for stamp transfer tax purposes as though it were made by the represented party, assuming it is correctly reflected in the Securities Dealer’s Swiss stamp transfer tax journal.
Relevance of information in Swiss stamp tax journal
Further, the Court concluded that the Federal Tax Administration can rely on the parties listed in the Swiss stamp tax journal, i.e. it is the responsibility of the Securities Dealer to ensure that the Swiss stamp tax journal is complete and accurate.
A year later - How did the market participants implement the Decision in practice?
Compared to one year ago, the identification as a Securities Dealer is now much more uniform with the Blue Card. In the past, it was often a big effort to obtain the Blue Card from the counterparty. Today, the sensitivity of the market participations is much higher and the handover of the Blue Card is much easier.
On the other hand, further attention is still needed to improve the quality of the Swiss stamp tax journal and the accurate documentation of the parties in direct proxy relationships (e.g. asset managers acting on behalf of a stamp tax exempt fund).