jurisdictional comparisons third edition 2015 · & rahul sharma cayman islands ... gibraltar...

Foreword John Rhodes Stonehage Law Ltd

Australia Clayton Utz Allan Blaikie & Andrew Sommer

Austria Dorda Brugger Jordis Rechtsanwaelte GmbH Paul Doralt & Martina Znidaric

Bermuda Conyers Dill & Pearman Alec R. Anderson

Canada Miller Thomson LLP Martin J. Rochwerg, Mary Anne Bueschkens & Rahul Sharma

Cayman Islands Collas Crill & CARD Antony Duckworth & Wendy Stenning

Cyprus Andreas Neocleous & Co LLC Elias Neocleous & Philippos Aristotelous

England & Wales Macfarlanes LLP Jonathan Conder & Oliver Court

France UGGC Avocats Line-Alexa Glotin

Germany Flick Gocke Schaumburg Dr. Christian von Oertzen

Gibraltar Isolas Peter A. Isola & Adrian Pilcher

Greece Elias Paraskevas Attorneys 1933 Dimitris E. Paraskevas, John G. Mazarakos, Ioanna A. Kombou & Ioannis A. Sarakinos

Guernsey Carey Olsen Laila Arstall

India Khaitan & Co Bijal Ajinkya & Shabnam Shaikh

Ireland Matheson John Gill & Allison Dey

Israel Alon Kaplan Advocate, Herzog Fox & Neeman Law Office Meir Linzen, Guy Katz & Eran Lempert, Aronson, Ronkin-Noor, Eyal Law Firm Lyat Eyal

Italy Carnelutti Studio Legale Associato Luca Arnaboldi & Gilberto Comi

Jersey Carey Olsen Paul Matthams & Keith Dixon

Malta Fenech & Fenech Advocates Rosanne Bonnici & Paul Gonzi

Mexico Jáuregui y Del Valle, S.C. Miguel Jáuregui Rojas

Monaco Donald Manasse Law Office Donald Manasse

The Netherlands Arcagna Arnold van der Smeede

New Zealand TGT Legal Pravir Tesiram

Portugal Cuatrecasas, Gonçalves Pereira Diogo Ortigão Ramos & Maria João Ricou

Singapore Allen & Gledhill LLP Sunit Chhabra & Mark Li

South Africa HR Levin Attorneys Hymie Reuvin Levin & Gwynneth Louise Rowe

Spain Cuatrecasas, Gonçalves Pereira Florentino Carreño & Carlos Ferrer

Switzerland Lenz & Staehelin Jean-Blaise Eckert

United States Kozusko Harris Duncan Stephen K. Vetter & Eric M. Dorsch

Private Client TaxJurisdictional comparisons Third edition 2015

General Editor: John Rhodes Stonehage Law Ltd

Private Client TaxJurisdictional comparisons Second edition 2015

General Editor:

John Rhodes, Stonehage Law Ltd

General EditorJohn Rhodes, Stonehage

Commissioning EditorEmily Kyriacou

[email protected]

Commercial DirectorKatie Burrington

[email protected]

Publishing EditorDawn McGovern

[email protected]

Senior EditorLisa Naylor

[email protected]

Editorial Publishing Co-ordinatorNicola Pender

[email protected]

Published in April 2015 by Thomson Reuters (Professional) UK Limited trading as European Lawyer Reference Series

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Private Client Tax

EUROPEAN LAWYER REFERENCE SERIES iii

ContentsForeword John Rhodes Stonehage Law Ltd v

Australia Clayton Utz Allan Blaikie & Andrew Sommer 1

Austria Dorda Brugger Jordis Rechtsanwaelte GmbH 21 Paul Doralt & Martina Znidaric

Bermuda Conyers Dill & Pearman Alec R. Anderson 33

Canada Miller Thomson LLP Martin J. Rochwerg, Mary Anne Bueschkens & 49 Rahul Sharma

Cayman Islands Collas Crill & CARD Antony Duckworth & Wendy Stenning 69

Cyprus Andreas Neocleous & Co LLC Elias Neocleous & Philippos Aristotelous 81

England & Wales Macfarlanes LLP Jonathan Conder & Oliver Court 101

France UGGC Avocats Line-Alexa Glotin 121

Germany Flick Gocke Schaumburg Dr. Christian von Oertzen 137

Gibraltar Isolas Peter A. Isola & Adrian Pilcher 153

Greece Elias Paraskevas Attorneys 1933 Dimitris E. Paraskevas, 173 John G. Mazarakos, Ioanna A. Kombou & Ioannis A. Sarakinos

Guernsey Carey Olsen Laila Arstall 187

India Khaitan & Co Bijal Ajinkya & Shabnam Shaikh 207

Ireland Matheson John Gill & Allison Dey 221

Israel Alon Kaplan Advocate, Herzog Fox & Neeman Law Office Meir Linzen, 239 Guy Katz & Eran Lempert, Aronson, Ronkin-Noor, Eyal Law Firm Lyat Eyal

Italy Carnelutti Studio Legale Associato Luca Arnaboldi & Gilberto Comi 259

Jersey Carey Olsen Paul Matthams & Keith Dixon 273

Malta Fenech & Fenech Advocates Rosanne Bonnici & Paul Gonzi 293

Mexico Jáuregui y Del Valle, S.C. Miguel Jáuregui Rojas 313

Monaco Donald Manasse Law Office Donald Manasse 329

The Netherlands Arcagna Arnold van der Smeede 341

New Zealand TGT Legal Pravir Tesiram 355

Portugal Cuatrecasas, Gonçalves Pereira Diogo Ortigão Ramos & 373 Maria João Ricou

Singapore Allen & Gledhill LLP Sunit Chhabra & Mark Li 393

South Africa HR Levin Attorneys Hymie Reuvin Levin & Gwynneth Louise Rowe 411

Spain Cuatrecasas, Gonçalves Pereira Florentino Carreño & Carlos Ferrer 429

Switzerland Lenz & Staehelin Jean-Blaise Eckert 447

United States Kozusko Harris Duncan Stephen K. Vetter & Eric M. Dorsch 467

Contacts 485

EUROPEAN LAWYER REFERENCE SERIES v

Foreword

ForewordJohn Rhodes Stonehage Law Ltd

Welcome to the third edition of Private Client Tax in the European Lawyer Reference Series. In the foreword to the first edition in 2010, I recounted how, against the advice of my peers, I had opted for a career on the private client side of the City of London law firm I joined after studying law at Cambridge. This proved to be an immensely stimulating choice, opening a world of challenging clients and problems with which I am still engaged some 47 years later.

Anyone opening this volume needs no convincing about the relevance and excitement of acting for wealthy private clients. Amongst them we count the wealth and job creators, whose role in our societies has never been more important than today.

Politicians spend at least as much time in aeroplanes as private client lawyers, but swept along in their motorcades from one meeting to another they fail to pick up the essential message that what western economies need at this stage of the cycle is less government interference, regulation and taxation and more stimulus from entrepreneurs. This is despite the clear evidence of history that countries adopting a tax-cutting, smaller government approach by and large provide more choice and a better standard of living for their citizens. In the foreword to the second edition in 2012, I questioned whether the policies advocated by François Hollande would serve his country well. The outcome is clear whatever statistics you choose – the French economy, his popularity rankings, or the number of his countrymen who have recently brought their families and their ingenuity across the Channel to England.

The simple truth is that western governments have become addicted to spending more than they raise in taxes. This, combined with dramatic increases in longevity, is a toxic brew, leaving them with two obvious solutions: increasing taxes or cutting expenditure, neither of which appeal to their electorates. But whatever combination of these two main policy strands governments adopt, the third weapon in their arsenal is making dramatic improvements in tax collection. In the years since our first edition was published, the focus on this last subject has been unrelenting, with the US authorities taking the lead after finally and very publicly losing patience with those who brokered the “banking secrecy” model. A new era of transparency has been ushered in via multiple Tax Information Exchange Agreements, complex Foreign Account Tax Compliance Act regulations and headline-grabbing penalty settlements paid by Swiss and other banks for encouraging past tax evasions.

All this was predictable, and indeed predicted by me and others from the early 1990s onwards. Some banks have responded by significantly reducing

Foreword

vi EUROPEAN LAWYER REFERENCE SERIES

the services provided for wealthy international families. All such families have to rethink their objectives and their strategies depending where they and their assets are located. One function of this volume is to enable such families and those who advise them to keep abreast of developments in this respect.

One general comment I would make is that, whilst it is still possible for families to organise their affairs so they quite legitimately pay well under the standard level of tax levied on permanent residents of the main western jurisdictions, it will undoubtedly become increasingly difficult to maintain such a lifestyle. This is a result not only of the greater transparency I have already mentioned, but also of hardening attitudes even in those jurisdictions which have traditionally welcomed foreign wealth, such as the UK and Switzerland. In the 2014 UK Autumn Statement, the cost of the Remittance Basis Charge for non-UK domiciled taxpayers was increased, for those who have been resident in 17 of the past 20 years to £90,000 a year. Already we see clear evidence that only the extremely rich are prepared to pay such an annual levy. In Switzerland, the November 2014 referendum on the forfait has allowed cantons to continue that regime if they so wish, but the mere fact that the question was ever put to a country-wide vote underlines a general perception that too much wealth has become concentrated in the hands of too few. This same theme was highlighted by President Obama in a recent major speech and I am told also lies behind current political unrest in Hong Kong, where wage earners can no longer afford to live centrally.

Does all this mean that if the very wealthy are to head-off a concerted attack they should willingly contribute more generously towards their share of the social contract?

As before, the authors of our different chapters are all experts in their own jurisdictions. One sure sign of competence is an ability to distil a complex subject down to its essentials. That you will find here. None of the chapters however is intended to provide more than an overview: any detailed case will have to be analysed on its own facts. But the list of authors here provides a ready guide to those who are well able to undertake that task, jurisdiction by jurisdiction and across jurisdictions too.

The publishers and I were delighted with the enthusiastic reaction received to the first and second volumes, which has given us the confidence to move ahead with the third. I have no doubt it will be similarly well received. Thanks are due to all our contributors for making time in their busy schedules to enable us to do this.

John RhodesLondonMarch 2015

EUROPEAN LAWYER REFERENCE SERIES 447

Switzerland

SwitzerlandLenz & Staehelin Jean-Blaise Eckert

1. NON-TAX ISSUES1.1 Domestic law1.1.1 Briefly describe your legal system and its originsSwitzerland is a federal union of 26 federating states called “cantons” and a federal power, referred to as “the Confederation”. Each canton is in turn divided in municipalities with some limited administrative powers. The cantons are sovereign insofar as their sovereignty is not limited by the Federal Constitution. They are in particular autonomous in administering their own political and financial affairs. Each canton is independent in generating income by levying taxes, unless the Federal Constitution gives the Confederation the exclusive right to levy a particular type of tax. However, most of the laws affecting civil aspects of estate planning, which especially means family, inheritance and property, are regulated at the federal level.

The Swiss legal system is based on the civil law tradition. As such, it depends primary on written codes. Thus, judicial decisions are of less importance than they are in common law jurisdictions. Moreover, even though Switzerland is located in the centre of Europe, it is not a member of the EU. Switzerland has chosen the way of bilateral negotiations with the EU, which resulted in the conclusion of two Bilateral Agreements. The second round of these Bilateral Agreements dealt in particular with Swiss participation in the Schengen/Dublin Agreement and the agreement on taxation of savings. It should be noted that these Agreements are often threatened by decisions taken by popular vote, which constitutes one of the main characteristics of the Swiss direct democracy.

1.1.2 What is the scope of your succession law?The Swiss inheritance law system is based upon the idea that the community of heirs steps into the deceased’s shoes at the time of the deceased’s death. It means that all assets and liabilities of the deceased vest in the community.

Switzerland recognises testamentary freedom to a certain extent. In fact, Swiss succession law is based on the system of statutory devolution of the estate, in the absence of will, allowing the testator to modify such system to a certain extent by will. Swiss successions also limits testamentary freedom by protecting some of the statutory heirs with forced heirship rights. Under Swiss succession law, the surviving spouse is entitled to 50% of the estate if there are surviving descendants. In the absence of descendants, but if there are surviving parents or their descendants, he/she is entitled to 75% of the estate. If there are no surviving descendants, or surviving parents or

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their descendants, the surviving spouse is entitled to 100% of the estate. If, in that case, there is no surviving spouse, the estate passes to the surviving grandparents, or their descendants. Thus, depending on the rights of a surviving spouse, the surviving descendants, the surviving parents or their descendants, and the surviving grandparents or their descendants are entitled to the estate in equal shares. In the case of no surviving spouse, descendants, deceased’s parents or their descendants or surviving grandparents or their descendants, the estate passes to the municipality of the deceased’s last domicile.

This intestate rule may be amended by a will. However, some of the statutory heirs are protected by forced heirship rights. Descendants are entitled to a compulsory share of 75% of their intestate entitlement; a surviving spouse or registered partner and parents are protected up to 50% of their intestate share; other statutory heirs are not protected. The portion of the estate that is not encompassed by the compulsory shares can be freely disposed of by the testator and is usually called the freely disposable share.

Forced heirship rights may also protect the heirs against inter vivos (between the living) acts, in particular revocable transfers and transfers made within five years of the time of death, as well as transfers made with the object of depriving the heirs of their protected rights. It should be noted that heirs are only given the right to challenge inter vivos acts. It means that such acts are not automatically void.

The protected heirs, including the spouse, may waive their forced heirship rights in a testamentary pact (to be executed before a notary public).

1.1.3 When are individuals and their property subject to succession rules?Upon death, the Swiss courts generally have jurisdiction and apply Swiss succession rules to the whole estate of a person whose final domicile was in Switzerland. However, in the case the deceased owned real estate located abroad, the inheritance laws of countries claiming jurisdictions over these assets are applicable. Moreover, Swiss nationals domiciled abroad may choose a foreign law as applicable. Regarding foreign nationals, they have the possibility to have their estate governed by the law of their country of origin, in order to avoid the Swiss forced heirship rules, for instance (see section 7).

1.2 Private international law1.2.1 What is the jurisdiction of local courts in international disputes?In Switzerland, the Swiss Private International Law Act (PILA) regulates not only the applicable law but also the jurisdiction of Swiss courts and authorities in international matters and the recognition of foreign judgments and decisions.

Regarding international disputes, the PILA comprises special parts, which deal, in particular, with inheritance, corporations, bankruptcy and trusts. Each section of the special part begins with the provisions on jurisdiction.

With regard to inheritance, the PILA is based upon the principle of the unity of the succession. Hence, it states that Swiss authorities have

Switzerland


jurisdiction over movable and immovable assets unless exclusive jurisdiction over real estate located abroad is claimed by a foreign state (see section 1.1.3).

Regarding corporations, as a rule, it is provided that the law of the country of organisation governs the legal nature of the corporation, its formation, dissolution, capacity to act, organisation, relationship between the corporation and its members, liability for its debts, power of representation and their liability. It should also be noted that the PILA further governs transfers of seat from Switzerland to a foreign country or from abroad to Switzerland.

Moreover, the PILA contains several provisions addressing jurisdiction in the case of trusts. Matters concerning trust law are limited to relations within a trust. It does not extend to disputes or non-litigious matters with third parties or to preliminary questions such as the validity of a deceased’s will or violation of forced heirship rights. As the trust instrument can provide for a forum selection, the PILA provides that if a Swiss court is chosen, it must accept the case if there is sufficient connection to Switzerland. If the trust deed does not provide for a forum selection clause, Swiss courts have jurisdiction if the defendant is domiciled or has his habitual residence in Switzerland, if the seat of the trust is in Switzerland or if the trust has a place of business in Switzerland.

1.2.2 What approach do local courts take to conflict of laws?In Swiss private international law, the applicable law is generally the one which presents the closest relationship with the case. Each special part of the PILA provides for various and detailed conflicts of law rules.

According to the PILA, all provisions, as either a public law or a private law provision, of the law designated by the conflict of law rules shall be applicable to the case at hand. However, an exception is made in the case where the application of a foreign law would produce a result which is incompatible with Swiss public policy. Moreover, mandatory provisions of Swiss law must be applied, notwithstanding the law designated by the conflict of law rules.

With regards Swiss public policy, it should be noted that forced heirship rules are not considered to be public policy provisions. This means that the Swiss courts will apply foreign laws, if applicable, even if they do not comply with Swiss forced heirship provisions.

Regarding recognition of foreign decisions, as a rule, recognition does not depend on reciprocity. Under the PILA, a judgment can be recognised if certain conditions are met, which constitute limited grounds for review: for example, the foreign jurisdiction had jurisdiction under the PILA, the foreign judgment is final, binding and compatible with the Swiss public order and the procedure did not violate basic principles of Swiss law, such as the right to be heard.

Accordingly, apart from these limited grounds, the Swiss courts will recognise and enforce foreign judgments.

Switzerland


2. TAXATIONIn Switzerland, taxes are levied at three different levels: federal, cantonal and municipal. On federal level, the Swiss Confederation has its own tax law application to the whole jurisdiction, which therefore applies equally to all cantons. At the cantonal and municipal levels, the tax laws vary depending on the canton and the municipality. The cantons are mainly responsible for assessment, collection and all the general administration of its own taxes. They also support the administration of federal direct taxes. Due to the fact that the cantons still have much independence, this can result in significant differences from one canton to another.

2.1 What are the criteria for liability to main taxes?The tax liability of individuals is unlimited in the case of personal affiliation, such as residence, to Switzerland. An individual is Swiss resident for tax purposes if he is domiciled in Switzerland or maintains a place of abode in Switzerland. An individual is domiciled in Switzerland if Switzerland is the place where he has his centre of vital interests. It means a place where the taxpayer actually stays and intends to stay. Thus, one takes into account where his family lives, the children go to school, he carries out his professional activity, a political function is practised, for example. A taxpayer is also considered to be Swiss resident for tax purposes if he stays 30 days combined with a gainful activity, or 90 days without such gainful activity, irrespective of short interruptions.

It should be emphasised that this is subject to tax treaties’ provisions relating to tax liability and that Switzerland has concluded about 50 Double Tax Agreements.

2.2 What are the relevant main taxes in your jurisdiction?Income taxSwiss taxpayers are subject to income tax on their worldwide net income. In Swiss tax laws, more or less all types of income are enumerated. Taxable income includes employment income as well as self-employment income, income from movable and immovable property, social security and private pension income, as well as irregular income (for example, lottery prizes). Non-taxable income is enumerated separately.

Income tax is levied at federal, cantonal and municipal levels. At the federal level, the tax rate is determined on the basis of the taxpayer’s worldwide income. The federal rate is moreover progressive, up to a maximum of 11.5%. At the cantonal level, however, the tax burden varies from canton to canton. More specifically, the tax rates are usually composed of a fixed basic rate and a flexible coefficient. The income taxes can together reach up to more than 40%, which is not the case in certain cantons, such as Zug or Schwyz, where the total tax burden varies between 19 and 21%.

It should be noted that non-resident individuals are taxed on all kinds of income derived from professional activities carried out in Switzerland.

Switzerland


Tax at source Foreign nationals living and working in Switzerland who do not hold a permanent residence permit, or residing abroad but exercising gainful activities in Switzerland, are subject to tax at source. Tax at source is computed on gross employment income for the current year. It should be noted that tax at source is final if the annual gross income does not exceed CHF 120,000. For income over CHF 120,000, an ordinary tax return has to be filed and the tax at source levied will be credited against the tax due. In this case, the taxpayer will also be ordinarily assessed in the following years. Regarding the tax rate, different tariffs apply depending on various elements such as marital status, religion, and so on. The rates also take into consideration certain standard deductions and are usually progressive.

Capital gains taxAt the federal level, capital gains on private movable or immovable property are tax exempt, unless the taxpayer is deemed to be a professional trader. This means that gains realised on private assets can be taxed as business income, even if they are not actually business property.

At the cantonal and municipal level, only capital gains on movable property are tax exempt. A cantonal property tax is levied on real estate gains. The applicable tax rate varies greatly depending on the canton and on the duration of the holding of the property. Rates generally vary between 0% for very long holding periods and 30%, but can be as high as 60% in case of short holding period. It should be noted that the transfer of the majority of shares in a real estate company is deemed to be a transfer of ownership of the property, which implies the levying of the cantonal real estate tax.

Inheritance/estate tax/gift taxThere is no inheritance and gift tax at the federal level even though its introduction is currently debated. At the cantonal level, however, gift and estate tax is levied by most cantons, but the canton of Schwyz. Tax jurisdiction normally lies with the canton of the last domicile of the deceased. The deceased’s worldwide estate, with the exception of foreign immovable property and assets belonging to a foreign permanent establishment, is subject to Swiss inheritance tax. If the gift or the bequest matter is Swiss real property and Swiss businesses, estate and gift tax may be levied even if the deceased or the donor was not domiciled in Switzerland.

The scope of the inheritance and gift tax varies greatly from canton to canton. Spouses are exempt in all cantons. In some cantons, registered partners of the same sex are treated, for tax purposes, in the same way as spouses. Direct descendants are tax exempt in most cantons, with the exception of the cantons of Vaud, Neuchâtel and Lucerne for inheritance tax, and the cantons of Argovie and Grisons for gift tax.

The taxable base is generally the market value of the property transferred. The rates of cantonal inheritance and gift tax are progressive and vary a lot among cantons. They usually depend on the degree of the relationship. Surcharges based on the value of the transferred property may also be levied.

Switzerland


The applicable rates may be as high as 55% in the event of a gift or bequest to an unrelated person.

A popular initiative launched by left-wing parties calls for the introduction of a federal inheritance and gift tax replacing the taxes currently levied at the cantonal and municipal levels. After being refused by the Swiss Parliament in 2014, it will have to be voted on by Swiss people on 14 June 2015. According to this popular initiative, inheritance and gift tax would be levied on the estate of individuals domiciled in Switzerland at the time of death or whose estate was opened in Switzerland, or if the donor was Swiss resident. The new tax would be at a flat rate of 20% for estates and gifts worth more than 2 million Swiss francs.

Wealth taxAt the federal level, there is no individual wealth tax. Cantons and municipality levy wealth taxes on the taxpayer’s worldwide net assets, with the exception of real estate located abroad. However, real estate located abroad is taken into account for determining the applicable tax rate. Net wealth tax may also be levied on the non-resident owner of business assets in a permanent establishment in Switzerland or real estate located in Switzerland. Assets are valued at their market value. Depending on the situation, the capitalised-earnings value may be taken into consideration for determining the tax base.

The cantons generally apply progressive tax rates which range from annually 0.15 and 1% of the taxable net worth. In the cantons that have high wealth tax rates, wealth tax may have significant impact on the overall tax burden.

Corporate taxLegal entities having either their registered office or their place of effective management in Switzerland are subject to unlimited tax liability. At the federal level, the effective tax rate on corporate profits is 7.8% and the federal system provides no tax benefit for any special type of company. Capital gains on the sale of assets are treated as ordinary income. Regarding the sale of real estate, many cantons apply special rules. At the cantonal and municipal levels, the corporate tax rates vary greatly. At the moment, all cantonal tax systems provide for special tax regimes depending on the type of company, in particular for holding companies, domiciliary companies and companies with mainly foreign-focused activities (called mixed companies).

Holding companies are, in principle, tax exempt from any cantonal income tax and pay a reduced cantonal tax on capital. These companies qualify for such tax privilege if their statutory purpose is the holding of qualifying participations, or income derived therefrom, and if they have no active trade or business in Switzerland.

A domiciliary company is a company that does not carry on business activities but only administrative activities, such as managing its own assets. Any other form of business in Switzerland, but not abroad, disqualifies the

Switzerland


company from this tax privilege. The cantonal tax laws determine the tax status of domiciliary companies. It is provided by law that income from substantial participations is tax exempt, other Swiss-source income is taxed at normal rates, and other foreign-source income is taxed at normal rates to the extent that it can be attributed to the management activities in Switzerland.

Mixed companies are companies whose business activity is primarily related to business abroad, whereas any business activity in Switzerland itself is of a secondary nature only. The taxable net profit of a mixed company is assessed in accordance with a divisional calculation depending on the type of income.

With regards special tax regimes, it should be emphasised that in September 2014 the Swiss Government launched the consultation process for the Swiss Corporate Tax Reform III (CTR III) and released a draft proposal regarding the revision of the Swiss corporate tax system. If accepted, the proposed changes to various Swiss tax laws are expected to enter into force between 2018 and 2020. One of the key points of the proposal is precisely to abolish these special cantonal tax regimes (that is, holding companies regime, as well as domiciliary/mixed companies regimes) at the latest two years after the entering into force of the new legislation. In order to compensate this abolishment, it should be noted that reductions of ordinary corporate income tax rates are planned at cantonal level even if this is not as such part of the CTR III.

Property taxThere is no federal property tax. However, more than half of the cantons levy such tax. Property tax is levied at the place of location of the real estate, without taking into account the taxpayer’s domicile. Property tax is assessed based on the full market value of the property, without allowing for the deduction of debts. Generally, it is assessed on the basis of the effective tax value at the end of the tax period.

VAT/sales taxThe VAT is a general consumption tax at the federal level. It is levied on all stages of production, distribution and the domestic service sector (domestic tax), on the acquisition of services supplied by companies domiciled abroad (service import tax) and on the import of goods (import tax).

As a rule, tax liability is provided for product suppliers or services providers with an annual turnover of more than CHF100,000 within Switzerland and Liechtenstein. Furthermore, tax liability applies for those who provide domestically services from companies abroad for more than CHF10,000 per calendar year (provided that those companies are not subject to taxation in Switzerland), as well as to importers of goods.

The basis for assessment of the VAT is the collected gross payment. Each taxable entity may deduct VAT paid on inputs.

The VAT rates are currently of 8% (standard rate) and 2.5% (reduced rate, applicable to food, medicine, newspapers, books and food).

Switzerland


Other taxes Switzerland also levies withholding tax on income deriving from movable property, such as dividends and interests, on prizes from Swiss lotteries and on certain insurance payments. The debtor of the taxable income is liable for the tax, which means that the withholding tax must be deducted by the debtor from the amount due to the recipient. Provided that certain conditions are met, in particular if income and capital are properly declared, Swiss recipients can ask for a refund of the tax withheld. This tax is especially designed to encourage Swiss taxpayers to declare their income derived from investments and capital properly. However, for non-resident taxpayers, the withholding tax generally represents a final tax burden. It should be noted that a partial or total refund may be granted only if a Double Taxation Agreement (DTA) has been concluded between Switzerland and the country of residence of the recipient of the income.

Switzerland has concluded DTAs with more than 70 countries.

2.3 Enforcement/collection of taxes2.3.1 What are the basic procedures for collection and enforcement?The Swiss income tax assessment is based on a mixed assessment procedure. The assessment procedure starts with the public request to file a tax return. As Swiss tax laws are based on the annual postnumerando principle, the annual tax return must be completed and sent back to the tax administration by the end of March or April of the following year, depending on the canton. It is however usually possible to ask for an extension of the time limit. The taxpayer must enclose necessary statements, records and certificates.

Where the taxpayer fails to file the tax return on time or if the taxable income cannot be determined, the tax will be assessed according to the tax administration’s best judgement, taking into account the information available.

After filing the tax return, the tax administration controls the statements of the taxpayer and may request further information. Then, the assessment authority assesses the amount of tax due. The decision indicating the amount of tax due is reported in writing to the taxpayer. Where the tax authority takes a decision which deviates from the taxpayer’s statements, it must explain the reason. If the taxpayer does not agree with the assessment, he has 30 days to appeal against the decision. If no objection is made, the assessment becomes legally binding.

Regarding the procedure for enforcement, a legally binding tax assessment is deemed a final money judgment and can be enforced by the tax administration following the ordinary debt collection procedure. In Switzerland, debts are pursued through a debt collection office. This office follows a standard process that begins when one party, here the tax administration, submits a debt collection request. A demand for payment is then served on the debtor. If the debtor wishes to contest the demand, he can lodge an objection notice which takes the form of a mere declaration, in which case the creditor must ask the courts for a court order to dismiss

Switzerland


the objection notice. Where the payment order is based on a binding tax assessment, the court will not review the merits of the tax assessment, but merely whether it is indeed a final binding tax assessment.

If the debtor does not contest the demand for payment within the time limit, he is deemed to have agreed to pay the debt. The creditor may then submit a request for continuation. This will ultimately lead to the garnishment of the debtor’s assets and their liquidation in favour of the tax authority, or either bankruptcy or debt restructuring if the taxpayer is a corporate entity.

2.3.2 To what extent is non-compliance an issue?There are no available statistics on the extent of non-compliance with taxpayers’ obligations and profits deriving from enforcement procedures. However, some cantons collected hundreds of millions of Swiss francs through partial amnesty programmes.

2.3.3 In which circumstances can default result in imprisonment? In Switzerland, default on a money claim, including a tax claim, cannot lead to imprisonment. However, certain acts or omissions in the process of tax assessment can amount to criminal offences which may lead to imprisonment. In that respect, a distinction has to be made between tax evasion and tax fraud.

Tax evasion (that is, when a taxpayer causes an assessment to be wrongfully omitted or a final assessment to be incomplete) is only sanctioned by a penalty that is up to three times the sum evaded (up to five times in the case of VAT). Such infringement is dealt by the tax administration and not by the criminal prosecutors.

Tax fraud is a qualified form of tax evasion and requires, for direct taxes, the use of falsified documents, whereas for indirect taxes, a qualified tax swindling, which can include the use of falsified documents, is sufficient. Committing tax fraud is considered to be a criminal offence in Switzerland and may lead to a fine up to CHF30,000 and imprisonment.

It should be noted that a revision of Swiss tax law as regards criminal offences is currently in preparation by the Swiss Government.

2.3.4 What are your laws on extradition for tax offences?Swiss extradition proceedings are governed by the Federal Act on International Mutual Assistance in Criminal Matters (IMAA). The Act permits extradition even where no corresponding treaty obligation exists. Co-operation with European and many non-European states is based largely on the European Convention on Extradition, as well as on bilateral extradition treaties.

As a rule, Switzerland will only allow extradition if the alleged offence committed by the perpetrator is punishable in both states (principle of dual criminality). However, the offence does not have to be defined in the same terms in both states. Under the principle of speciality, the extradited person may be prosecuted, held in custody or extradited on to a third state only for

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those criminal offences that were committed prior to his extradition and on the basis of which the extradition was approved.

In case of tax offences connected with direct taxes, Switzerland does not extradite. Extradition on the grounds of fiscal offences will be approved only in particularly serious cases. The terms of cooperation under the Schengen Agreement provide for extradition owing to offences in the realm of consumer taxes, VAT and customs duties. A fiscal offence is not deemed to have been committed in cases in which perpetrators of subsidy fraud have money which is not due to them or paid out to them under false pretences by the tax administration. Such offence may thus lead to extradition.

Like many other states, Switzerland reserves its right to refuse to extradite its own nationals.

Moreover, as a rule, criminal proceedings that are already pending in the requested state for the same offence take precedence over extradition. Furthermore, an existing conviction for the same offence in the requested state rules out extradition, in accordance with the non bis in idem (no person to be tried twice) principle.

2.3.5 Have there been any recent changes of behaviour by tax authorities?Some recent cases show that Swiss tax authorities have become less reluctant to initiate tax evasion or tax fraud proceedings against taxpayers. This trend concerns especially the bigger cantons which initiate more criminal procedures than they used to. Moreover, it should be noted that tax authorities hire more and more specialists to deal with penal proceedings.

2.3.6 Are there any voluntary disclosure or amnesty programmes?Three general tax amnesty programmes have been decreed in Switzerland between 1940 and 1969. They took effect at the federal, cantonal as well as municipal levels. They abolished all the legal consequences of tax evasion.

More recently, the Swiss Confederation set up a partial amnesty programme that allows every citizen to voluntarily disclose undeclared assets once in his life. It applies to direct federal, cantonal and municipal taxes and comprises two parts: inheritance and tax evasion. Regarding inheritance, under certain conditions provided by law, if the heirs spontaneously disclose undeclared funds held by the deceased, the tax authority shall notify tax supplements only on the last three years instead of the 10 last years. Regarding tax evasion, depending on the fulfilment of certain conditions laid down in the law, if the taxpayer voluntarily discloses his undeclared items, the tax authority shall notify tax supplements over the past 10 years, but without penalty and without criminal prosecution. In the past, some cantons implemented such partial amnesty programmes.

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3. EXEMPTIONS AND/OR EXIT TAXES FOR NEW IMMIGRANTS AND EMIGRANTS 3.1 Which taxes are relevant in your jurisdiction?Swiss ForfaitUnder Swiss tax law, foreign individuals who are residents in Switzerland without carrying out any gainful activities in Swiss territory may benefit, if certain conditions are met, from a special taxation regime. Such taxation, known as the lump-sum taxation regime (“forfait fiscal”), is a simplified assessment procedure of the basis on which regular taxes are levied.

For the purpose of the current law, taxation is calculated according to expenditure (annual expenses due to lifestyle, such as expenses incurred for food and clothing, housing, employees, leisure activities, travel, insurances, taxes, mortgage financing, and so on) of the taxpayer and his family. However, there is a minimum amount equal to five times the rent of the taxpayer or the rental value of his real estate property. Moreover, according to a control calculation, paid tax must not be less than the amount normally due if calculated on some raw elements defined by law. Thus, the tax to be paid by the taxpayer is the greater of these two amounts: either the amount calculated on the expenditure or the one calculated according to the control calculation.

The federal law merely sets the minimum standards for lump sum taxation and the cantons have thus plenty of room to apply them. Some cantons have introduced a minimum amount for the lump sum figures. The amount of the deemed expenses which serve as a tax base is negotiated with the cantonal tax authorities of the canton of residence of the taxpayer. This tax ruling is in general granted for a period of five years.

In recent years, a growing discontent has been observed in some political circles and among the population. Public pressure has already lead to the abolition of this regime in several cantons, Zurich in particular. However, it should be noted that the Swiss population refused, in a popular vote, to abolish this special regime at the federal level at the end of 2014.

Anyway, due to the fact that the Federal Council wishes to maintain this type of taxation based on expenditure, primarily for economic reasons and to strengthen the acceptance of this form of taxation among the population, stricter conditions for granting this taxation regime were adopted by the Swiss Parliament in 2012. These changes, both for direct federal taxation and for cantonal taxes, will be applicable to direct federal and cantonal taxes for foreigners living in Switzerland as from 1 January 2016.

In essence, the new criterion for calculating the lifestyle of the taxpayer is seven times rather than five times the cost of housing. In addition, under the new act concerning direct federal tax, the minimum tax base amounts to at least CHF400,000. For cantonal taxes, it is up to the cantons to freely set the amount. It should be noted however that several cantons, including Geneva, already provide today in their cantonal legislation for a minimum tax base amount close to the new federal limit.

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The old tax regime will still be applicable for five years, namely until December 2021, for taxpayers who are already taxed according to expenditure at the time of entry into force of the new legislation.

4. USE OF ASSET HOLDING VEHICLES 4.1 Which vehicles are available in your jurisdiction and how are they treated by the courts?TrustsFirst of all, it should be emphasised that Swiss law does not know the concept of a “trust”. However, even though it is not possible to settle a trust under Swiss substantive law, Swiss courts recognise trusts that are governed by the law of another jurisdiction as a foreign legal form sui generis. It should be stressed that they do not possess the attributes of legal personality, which means that they are not subjects of law and do not have the legal capacity to sue and be sued before Swiss courts. The Federal Council ratified in 2007 the Hague Convention on the Law Applicable to Trusts and on their Recognition (Hague Trust Convention), which enshrines rules of conflicts applicable to trusts. Simultaneously, provisions were introduced in the PILA, in order to transpose the Convention into Swiss law. The PILA provisions grant a settlor unfettered freedom to choose the law applicable to the trust or, if the settlor does not make a choice, trusts are governed by the law most closely connected to the trust.

The Hague Trust Convention and Swiss tax laws do not deal with taxation of trusts. The Swiss Conference of Taxation therefore published Circular letter number 30, which sets out guidelines on the taxation of trusts and trustees with connections to Switzerland. It must be stressed that this Circular has a non-binding status in connection with Swiss taxes. This explains why cantonal tax authorities may have a different practice. Hence, it is advisable to seek the tax authorities’ written approval regarding the taxation from a Swiss tax perspective of the trust involved.

The Circular letter states that if neither the settlor nor any of the beneficiaries are Swiss residents and if the trust assets do not include any Swiss real property, the trust arrangement is not subject to Swiss taxation. This Circular also provides that if a foreign trust has a Swiss resident trustee or protector, only the fees generated by the trustee or protector will be subject to Swiss taxes.

The taxation of trusts depends on the type of trust. The following distinctions are made.

For revocable trusts, the Circular provides that they are transparent for Swiss tax purposes, which means that the settlor remains the sole owner of all the trust’s assets. Moreover, all income of the trust is allocated to him. This has the consequence that capital gains are usually tax exempt according to Swiss income tax rules, distributions to beneficiaries are taxed as gifts and that upon a settlor’s death a revocable trust becomes an irrevocable trust.

Irrevocable fixed interest trusts are treated as a donation upon establishment. Thus, the establishment is subject to cantonal gift and estate or inheritance laws. The trust’s assets and income are directly attributed to

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the beneficiaries. If there is a Swiss beneficiary, his part of the trust property is subject to cantonal wealth tax. In that regard, it should be emphasised that a trust created by a Swiss settlor is ignored for tax purposes unless a beneficiary acquires an immediate present entitlement to the trust assets. This means that only irrevocable fixed-interest trusts created by a Swiss settlor are recognised for Swiss tax purposes (a special case is however made for Swiss residents subject to lump sum taxation). Any distribution to Swiss beneficiaries is considered as taxable income. It should be noted that, as a rule, capital gains and reimbursement of contributions are not subject to tax.

As for irrevocable fixed interest trusts, irrevocable discretionary trusts are treated as a donation upon establishment. Thus, the establishment is subject to cantonal gift and estate or inheritance laws. If the settlor is a Swiss resident, the trust assets are attributed to the settlor, as the beneficiaries only have contingent rights. However, any distribution of income is taxable in Switzerland if the beneficiaries are Swiss residents. If the initial trust capital was taxed as a gift, the distribution of this originally contributed property is not taxable. It should be noted that, contrary to the basic principles of Swiss tax law, capital gains attributed to Swiss beneficiaries are considered to be taxable income.

CompaniesSwiss companies may be used as an asset holding vehicle. As briefly explained above, there exist different tax privileges for holding, domiciliary and mixed companies. The two main types of companies existing in Switzerland are limited liability companies and corporations.

The existence of a foreign company duly created under its governing law is automatically recognised in Switzerland even if it is not expressly stated in Swiss law. Accordingly, foreign companies are legally capable of having rights and incurring obligations and can both sue and be sued in their corporate capacity in Swiss courts.

FoundationsAccording to Swiss law, the family foundation set forth in the Civil Code is a foundation serving private purposes and is neither required to be registered in the commercial register, nor subject to state supervision. As this type of foundation may only be established to defray the costs of upbringing, to endow or support family members or for similar purposes, the establishment of a Swiss family foundation is not a common technique.

Foreign foundations are generally recognised in Switzerland if they conform to the internal laws of the place of their seat. For tax purposes, as foundations have legal personality, they are themselves subject to profit tax and capital tax to the extent they are Swiss resident. Tax rules regarding that kind of foundation are an obstacle to the use of Swiss foundations in an asset-structuring context, whereas foundations for charitable purposes are tax exempt.

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PartnershipsUnder Swiss law, the general partnership and the limited partnership do not have separate legal personality. They are both transparent for tax purposes. Therefore, their profits are directly taxed at the level of the partners rather than at the partnership level. As a consequence, they are rarely used as asset holding vehicle.

5. PHILANTHROPIC AND CHARITABLE OPTIONS5.1 Is there a compulsory registration system for charities?Foundations (see articles 80 and following and 335 of the Swiss Civil Code) acquire legal personality upon their entry in the commercial register. Apart from publicity, the entry in the commercial register also has a constitutive effect. However, public law, family and ecclesiastical foundations are not required to be entered in the commercial register to obtain legal personality. This means that a voluntary entry has solely declaratory effect.

5.2 Are there any tax reliefs available?The tax law governing non-profit organisations is laid down in federal tax laws. As the relevant provisions are sparse, the Swiss federal tax administration released a Circular letter on the tax exemption of legal persons that pursue public, charitable or educational and cultural purposes and regarding the tax deductibility of gifts. Hence the entity involved may have a for-profit activity, but this must be clearly secondary to the public purpose. There exists no official percentage of accepted for-profit activity in comparison with the public purpose. The general public interest is by no means limited to purely domestic activities.

Moreover, the class of beneficiaries must be open. This excludes the self-interest of the founder. It also has the consequence that the funds can never be returned to the founder, even in the case of dissolution of the entity.

It should be noted that this Circular does not bind the tax administration. Moreover, the importance of practice is particularly obvious for non-profit organisation tax law, as the regulatory framework is not very developed.

5.3 Are there any particular distribution requirements and can domestic charities apply funds outside your jurisdiction?There are no specific distribution requirements. According to the foundation charter, distributions must not be restricted, for instance, to members of a certain family, association or profession. In the same sense, as the public interest foundation carries out, as a rule, its public interest purpose, it is not sufficient not to distribute anything and thus to keep the foundation dormant.

The general public interest is by no means limited to purely domestic activities, which means that a Swiss foundation can apply funds inside and outside Switzerland.

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6. REGULATORY ENVIRONMENT6.1 What is the financial environment like for funds and other investment vehicles?In Switzerland, the legal basis for the fund business is the Swiss Federal Act on Collective Investment Schemes (CISA) which came into force in 2007 and was revised in 2013. Swiss legislation has thus been brought in line with Directive 2014/91/EU of 23 July 2014 amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions and with the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers (AIFM). The CISA is designed as a framework law and focuses solely on providing basic regulations. The main additional legal texts are the Ordinance of the Swiss Federal Council on Collective Investment Schemes (CISO), also partially revised in 2013, and the Ordinance of the Swiss Financial Market Supervisory Authority on Collective Investment Schemes (CISO-FINMA). A revised version of this ordinance came into force on 1 January 2015 and has been adjusted in line with the changes in national and international regulatory standards.

The supervisory authority for investment funds in Switzerland is the Swiss Financial Market Supervisory Authority (FINMA). It is responsible for the authorisation and supervision of the institutions and investment funds subject to its control.

The aims of the CISA are to protect investors and to ensure the transparency and functionality of the market. It regulates open-end and closed-end collective investment schemes. Only funds established on a contractual basis or as an investment company with variable capital (SICAV) are permitted as open-end collective investments schemes. Closed-end collective investment schemes take the form of a limited partnership for collective investment or an investment company with fixed capital (SICAF).

6.2 What is the impact of anti-money laundering legislation on professional/banking confidentiality?In Switzerland, money-laundering regulations are based on two pillars. On the one hand, the Swiss Penal Code at its article 305 bis and ter defines sanctions on money laundering, which is considered to be a criminal offence. On the other hand, there exists the Anti-Money Laundering Act (MLA) which prescribes compliance for financial intermediaries with due diligence and reporting requirements at the time of concluding business with clients. Regarding the MLA’s scope of application, this act applies to financial intermediaries, such as banks, fund managers, investment companies, insurance institutions, securities dealers, and all persons who, on a professional basis, accept or hold deposit assets belonging to others or who assist in the investment or transfer of such assets.

When establishing a business relationship, the financial intermediaries must verify the identity of the client and establish the identity of the

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beneficial owner of the assets. In the event of a suspicion of money laundering, the financial intermediaries must immediately file a report with the Swiss reporting office and freeze the assets entrusted to it that are connected with the report filed for suspicion.

With regard to professional/banking confidentiality, financial intermediaries are prevented by professional secrecy in the case of banks, securities dealers and managers of collective investment schemes, and by data protection laws from disclosing their findings to third parties other than through the legal means provided by the reporting rights and obligations of the MLA. Hence, the financial intermediaries who submit suspicious activity reports to the Swiss authorities and freeze assets may not be prosecuted for a breach of professional, commercial or official secrecy. Moreover, they may also not be held liable for a breach of contract if they have acted with due care in fulfilling their duties under the MLA.

6.3 Is it necessary to comply with tax and other information exchanges?Switzerland has been committed to complying with international standards in tax matters since March 2009. This means that Switzerland agreed it should negotiate or renegotiate its DTAs and allow for administrative assistance based on article 26 of the OECD Model Tax Convention (OECD-MC). To date, Switzerland had signed about 50 DTAs that are in line with the OECD-MC.

In 2012, Switzerland also decided to adopt tax information exchange agreements (TIEAs), which merely govern the exchange of information. Switzerland’s three first TIEAs, which means with Jersey, Guernsey and the Isle of Man, have entered into force and are applicable from 1 January 2015. To date, a total of seven TIEAs had been signed.

Moreover, in 2013, the Swiss Government approved the signing of the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters. It also adopted a draft mandate for negotiations regarding a revision of the taxation of savings agreement concluded with the EU. Negotiations commenced in mid-January 2014. However, it should be noted that the forthcoming negotiations with the EU on the introduction of the automatic exchange of information require a reorientation of the ongoing talks on extending the savings tax agreement.

Regarding the introduction of the automatic exchange of information, Switzerland contributed actively to the elaboration of the new standard. It started in 2014 when the federal government approved the draft mandates for negotiations on introducing the automatic exchange of information with the EU, the United States and other countries. During the negotiations, Switzerland always considered that there should be only one global standard. Moreover, it emphasised the importance of the principle of speciality, which means that the exchanged information should be used solely for the agreed purpose, with a focus on reciprocity and data protection.

In January 2015, the Swiss Government launched two consultations on the legal foundations for introducing the future international automatic

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exchange of information in tax matters. Both consultations will take place until April 2015. The first concerns the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters and the second concerns the Multilateral Competent Authority Agreement and the Automatic Exchange of Information implementing act. It is planned that the Parliament will thus discuss the draft legislation from autumn 2015. Therefore, the legal foundations could come into force from the beginning of 2017, even with a possible referendum. It would thus be reasonable to expect Switzerland’s first automatic exchange of information with a foreign country in 2018.

This really confirms Switzerland’s commitment to the global fight against tax fraud and tax evasion.

6.4 What is the impact of US and other FATCA rules?The agreement between Switzerland and the US on cooperation to simplify the implementation of the Foreign Account Tax Compliance Act (FATCA) entered into force on 2 June 2014. The Federal Council brought the corresponding implementing act into force on 30 June 2014. FATCA implementation in Switzerland is based on Model 2. This means that Swiss financial institutions will disclose account details directly to the US tax authority with the consent of the US clients concerned. In the case of recalcitrant clients, the US will have to request data through normal administrative assistance channels.

However, as the FATCA agreement between Switzerland and the US makes provision for a switch from Model 2 to Model 1, negotiation on a Model 1 agreement should commence in 2015. A Model 1 agreement has data being exchanged automatically via the two countries’ tax authorities.

In practice, the current course of business of Swiss banks must definitely be adapted to include all the changes imposed by the FATCA agreement. Since 1 July 2014, all new account openings have to go through the necessary controls to allow the bank to objectively classify these accounts into two categories: non-US or US persons. Additionally, appropriate controls should be implemented to capture any change of circumstances. Moreover, if a US index is identified on an account, the bank has to ask for clarification to make a decision on the client’s tax status. If the client refuses to provide the required documents, the bank will consider this client as non-consenting. A report will then be forwarded to the Internal Revenue Service via the Swiss tax authorities, indicating the number of non-consenting clients and assets held by these customers. Therefore, it can be easily concluded that this agreement will lead to significant changes in the Swiss banking industry.

7. KEY PLANNING POINTS FOR LONG TERM RESIDENT FAMILIESInheritance matters/testamentary pacts Attention should be paid to the issue of applicable law for inheritance matters, because in the case the deceased had his last permanent residence

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in Switzerland, Swiss inheritance laws govern his estate. It should be emphasised that Swiss forced heirship rules also apply to such fact patterns.

However, in order to avoid those Swiss forced heirship rules, the foreign national residing in Switzerland may choose that the inheritance laws of his country of origin govern his estate. It also remains possible that the protected heirs, including the spouse, wave their forced heirship rights in a testamentary pact with the immigrant foreign national. Attention should also be brought to any prenuptial or similar agreement entered into by the spouses. Absent any such agreement, assets of each spouse, earned during the marriage, will be divided in equal shares in the event of the end of the marriage (death or divorce).

TrustsWith regard to the rules regarding the recognition of trusts for tax purposes, in particular, it may be advisable to settle a trust before taking residence in Switzerland. Indeed, the tax constraints provided that the settlor is a Swiss resident will usually prevent the settlement of a trust (see section 4.1).

8. KEY POINTS FOR MIGRATING/TEMPORARILY RESIDENT FAMILIESTax privileges apply to expatriates, defined as members of management or employees with specialist skills, sent by their employer to Switzerland for a temporary assignment, for a maximum period of five years. Switzerland offers attractive deductions for expatriates as deductions for moving costs to Switzerland and back to the country of origin, reasonable costs for accommodation in Switzerland, schooling expenses for the taxpayer’s children for attending foreign language school, a flat rate expatriate deduction which usually amounts to CHF1,500 per month, certain travel expenses, and so on. Higher costs may be deducted based on documented expenditures.

The method for claiming these deductions depends on the tax assessment procedure, as expatriates may be assessed under the ordinary tax procedure or to the taxation at source.

This special treatment ends as soon as the temporary assignment is changed into a timely unlimited contract or after five years of staying in Switzerland.

9. FORTHCOMING LEGISLATION/OTHER CHANGESVarious amendments to existing legislation are pending approval in a near future: • Consultation procedure of a draft proposal regarding the revision of the

Swiss corporate tax system, known as the Swiss Corporate Tax Reform III (see section 2).

• Consultation procedure of a draft proposal of a federal act on the unilateral application of the exchange of information according to the Organisation for Economic Co-operation and Development (OECD) standard (see section 6.3).

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• Consultation procedure of a federal decree approving the implementing of the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters (see section 6.3).

• Consultation procedure of a federal decree approving the Multilateral Agreement between authorities competent for the automatic exchange of information relating to financial accounts (see section 6.3).

• A federal act on the tax exemption of legal entities pursuing idealistic goals is currently pending approval from the Swiss Parliament (see section 5).

• A federal act on the revision of the tax the source of employment income is before the Swiss Parliament (see section 2).

• TIEAs with Greenland and Andorra are pending approval from the Swiss Government and TIEAs with Belize and Grenada are still pending signature (see section 6.3).

10. USEFUL REFERENCESSwiss federal authorities – www.admin.ch.Swiss federal legislation – www.admin.ch/bundesrecht/00586/index.html?lang=fr.Federal Supreme Court – www.bger.ch.Federal Tax Administration – www.estv.admin.ch/?lang=fr.Swiss Financial Market Supervisory Authority – www.finma.ch.Swiss Association of Trust Companies – www.satc.ch.Swiss Federal Office for Migration – www.bfm.admin.ch/bfm/fr/home.html.Swiss Conference of Taxation Circular letter number 30 on taxation of trusts and trustees with connections to Switzerland – www.steuerkonferenz.ch/downloads/kreisschreiben/ks030_f.pdf.

Contact details


Contact detailsGENERAL EDITORJohn Rhodes Stonehage Law Ltd15 Suffolk Street London SW1Y 4HG United KingdomT: +44 20 7087 0087F: +44 20 7087 0004E: [email protected]: www.stonehage.com

AUSTRALIAAllan Blaikie & Andrew SommerClayton Utz1 Bligh StreetSydney NSW 2000AustraliaT: +61 2 9353 4201F: +61 2 8220 6700E: [email protected]: [email protected]: www.claytonutz.com

AUSTRIAPaul Doralt, Martina Znidaric Dorda Brugger Jordis Universitätsring 10 A-1010 Vienna T: +43 1 533 4795 101 F: +43 1 533 4797E: [email protected]: www.dbj.at

BERMUDAAlec AndersonConyers Dill & Pearman LimitedClarendon House2 Church StreetPO Box HM 666Hamilton HM CXBermudaT: +1 441 295 1422

F: +1 441 292 4720E: [email protected]: www.conyersdill.com

CANADAMartin J. Rochwerg, Mary Anne Bueschkens & Rahul SharmaMiller Thomson LLPScotia Plaza, 40 King Street West, Suite 5800, P.O. Box 1011Toronto M5H 3S1Ontario, CanadaT: +1 416 595-8500F: +1 416 595-8695E: [email protected]: [email protected]: [email protected]: www.millerthomson.com

CAYMAN ISLANDSAntony DuckworthCollas Crill & CARDZephyr House122 Mary Street, Box 709George TownGrand Cayman KY1-1107T: +345 949 4544F: +345 949 8460E: antony.duckworth@

collascrillcad.comW: www.collascrillcard.com

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E: [email protected]: www.neocleous.com

ENGLAND & WALESJonathan Conder & Oliver CourtMacfarlanes LLP20 Cursitor StreetLondon EC4A 1LTUnited KingdomT: +44 20 7831 9222F: +44 20 7831 9607E: [email protected]: [email protected] W: www.macfarlanes.com

FRANCELine-Alexa GlotinUGGC Avocats47 rue de Monceau75008 Paris, FranceT: +33 1 56 69 70 00F: +33 1 56 69 70 71E: [email protected] W: www.uggc.com

GERMANYDr. Christian von OertzenFlick Gocke SchaumburgMesse Turm, Friedrich-Ebert-Anlage 4960308 Frankfurt A.M.GermanyT: +49 69 717 03 0F: +49 69 717 03 100E: [email protected]: www.fgs.de

GIBRALTARPeter A. Isola & Adrian PilcherIsolasPortland HouseGlacis Road, PO Box 204GibraltarT: +350 200 78363F: +350 200 76651E: [email protected]: [email protected]: www.gibraltarlawyers.com

GREECEDimitris E. Paraskevas, John G. Mazarakos, Ioanna A. Kombou & Ioannis A. SarakinosElias Paraskevas Attorneys 19337 Asklepiou StreetAthens 10679GreeceT: +30 210 36 10 333F: +30 210 36 45 329E: [email protected] W: www.paraskevaslaw.com

GUERNSEYLaila ArstallCarey OlsenCarey HouseLes BanquesSt Peter Port GY1 4BZGuernseyT: +1481 741544F: +1481 739044E: [email protected]: www.careyolsen.com

INDIABijal Ajinkya & Shabnam Shaikh Khaitan & CoOne Indiabulls Centre 13th Floor, Tower 1841 Senapati Bapat Marg Mumbai 400 013, IndiaT: +91 22 6636 5000 F: +91 22 6636 5050E: [email protected]: [email protected]: www.khaitanco.com

IRELANDJohn Gill & Allison DeyMatheson 70 Sir John Rogerson’s QuayDublin 2IrelandT: +353 1 232 2000F: +353 1 232 3333E: [email protected]: www.matheson.com

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ISRAELAlon Kaplan, Advocate; Lyat Eyal (Aronson, Ronkin-Noor, Eyal Law Firm)1 King David BoulevardTel Aviv 64953IsraelT: +972 3 6954463F: +972 3 6955575E: [email protected]: [email protected]: www.alonkaplan-law.com

(Alon Kaplan)W: www.are-legal.com (Lyat Eyal)

Meir Linzen, Guy Katz & Eran LempertHerzog Fox & NeemanAsia House4 Weizmann StreetTel Aviv 6423904T: +972 3 692 2020F: +972 3 696 6464E: [email protected]: [email protected]: [email protected]: www.hfn.co.il

ITALYLuca Arnaboldi & Gilberto ComiCarnelutti Studio Legale AssociatoVia Principe Amedeo 320121 MilanItalyT: +39 02 65585 1F: +39 02 65585 585E: [email protected]: [email protected]: www.carnelutti.com

JERSEYPaul Matthams & Keith DixonCarey Olsen47 EsplanadeSt HelierJersey JE1 0BDT: +44 1534 888900F: +44 1534 887744E: [email protected]

E: [email protected]: www.careyolsen.com

MALTARosanne Bonnici & Paul Gonzi Fenech & Fenech Advocates198 Old Bakery StreetValletta VLT1455MaltaT: +356 2124 1232F: +356 2599 0644E: [email protected]: [email protected]: www.fenechlaw.com

MEXICOMiguel Jáuregui RojasJáuregui y Navarrete S.C.Torre Arcos Bosques IPaseo de los Tamarindos 400-B,Pisos 8 y 9Bosques de las Lomas 05120MexicoT: +52 55 52 67 45 03F: +52 55 52 58 03 48E: [email protected]

MONACODonald ManasseDonald Manasse Law OfficesEst-Ouest24 Boulevard Princesse CharlotteMC 98000 MonacoT: +377 93 50 29 21F: +377 93 50 82 08E: [email protected]: www.manasselaw

THE NETHERLANDSArnold van der SmeedeArcagnaMuseumplein 5 E & F1071 DJ AmsterdamThe NetherlandsT: +31 20 305 0850F: +31 20 305 0855E: [email protected]: www.arcagna.com

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NEW ZEALANDPravir TesiramTGT LegalLevel 7, 3-13 Shortland StreetPO Box 4039Auckland 1140New ZealandT: +649 920 8672F: +649 920 8665E: [email protected]: www.tgtlegal.com

PORTUGALDiogo Ortigão Ramos & Maria João RicouCuatrecasas, Gonçalves PereiraPraça Marques de Pombal, 21250-160 LisbonPortugalT: +351 21 355 38 00F: +351 21 352 44 21E: [email protected]: [email protected]: www.cuatrecasas.com

SINGAPORESunit Chhabra & Mark LiAllen & Gledhill LLP1 Marina Boulevard #28-00Singapore 018989T: +65 6890 7188F: +65 6327 3800E: [email protected]: [email protected]: www.allenandgledhill.com

SOUTH AFRICAHymie Reuvin Levin & Gwynneth Louise RoweHR Levin Attorneys, Notaries and ConveyancersKentgate64 Kent Road, cnr Oxford RoadDunkeld, Johannesburg 2196South AfricaT: +2711 788 1625F: +2711 788 1637

E: [email protected]: [email protected]

SPAINFlorentino Carreño & Carlos FerrerCuatrecasas, Gonçalves PereiraC/ Almagro 928010 MadridSpainT: +34 915 247 117F: +34 915 247 124E: [email protected]: www.cuatrecasas.com

SWITZERLANDJean-Blaise EckertLenz & StaehelinRoute de Chêne 301211 Geneva 17SwitzerlandT: +41 58 450 70 00F: +41 58 450 70 01 E: [email protected]: www.lenzstaehelin.com

UNITED STATESStephen K. VetterKozusko Harris Vetter Wareh Duncan LLP1666 K Street, N.W. Suite 400Washington, DC 20006USAT: +1 202 457 7209F: +1 202 318 4451E: [email protected]: www.kozlaw.com

Eric M. DorschKozusko Harris Vetter Wareh Duncan LLP575 Madison Avenue, Suite 7DNew York, New York 10022USAT: +1 212 405 4770F: +1 212 214 0855E: [email protected]: www.kozlaw.com

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