In the last week of March 2021, the Swiss Federal Tax Administration, Main Division VAT ("FTA") published in the VAT sector info 14 ("MBI 14") the Swiss VAT practice clarifications in connection with the Financial Services Act ("FIDLEG") which came into force on 1 January 2020.
In particular, the FTA has replaced in MBI 14 the provisions on the distribution of collective investment schemes pursuant to the Collective Investment Schemes Act ("CISA") with those on the offering of collective investment schemes pursuant to the FIDLEG. According to the practice clarification, all activities aimed at promoting the sale of collective investment schemes fall under the term offering of units/shares in collective investment schemes.
Relevance in practice:
The predominant view of the various stakeholders is that the practice clarifications are of a purely formal nature, i.e. the term "distribution" is replaced with the term "offering" and that this has no effect on the actual Swiss VAT treatment of the various supply flows in connection with the offering (old: distribution) of units/shares in Swiss and foreign collective investment schemes. This is generally correct.
However, the practice specification leads to the following uncertainties:
Slight widening of the VAT exemption for services that are in the area of advertising in connection with the offering of collective investment schemes.
Increase in uncertainty for compensation models with recurring payments to foreign delegates. The reason for the increase in uncertainty is that (1) the relevant regulatory provisions referenced by the FTA in MBI 14 focus more on the actual point in time of the offering and (2) the assessment of whether the "foreign delegate" meets the requirements is more demanding due to the new provisions.
Thus, our recommendation is to review the Swiss VAT treatment of existing offerings and compensation arrangements for units/shares in Swiss and foreign collective investment schemes in due course.
