On 19 May 2019 the Swiss voter finally lived up to its pro-business reputation and with 66% overwhelmingly voted “yes” to the so-called Swiss Tax Reform and AHV Financing Bill, after the previous Swiss tax reform bill was rejected by the voter in a referendum on 12 February 2017. It is now “all clear” for the enactment of the tax reform by the cantons as per 1 January 2020.
One central step in preparing for the unknown is to identify key uncertainties, i.e. trends whose realisation remains highly uncertain, but whose impact could be critical for industry players. During our recent sessions with executives (CEOs, head business development, chief strategists, etc.) from leading private banks to discuss the future of wealth management, we jointly reviewed more than 50 individual industry drivers to distil these into six key uncertainties for private banking and wealth management in 2030.
Register to our Business Travellers Event with a focus on the Financial Services Industry on Tuesday, 21 May 2019 in Zurich. We will discuss the current regulatory and compliance landscape for international business travellers.
What is the event about?
- The global trends driving increased risk in relation to business travel;
- The growing regulatory burden on employers and employees, and the increased efforts by authorities to enforce these regulations;
- Permanent Establishment risks in relation to business travel;
- The steps employers are taking to monitor business travel risks and improve governance; and
- Current market best practice - prioritising compliance risks, quantifying costs and addressing duty of care considerations.
A number of key financial regulators around the globe are increasing the pressure on supervised firms to respond to the need to transition away from interbank offered rates (IBORs).
It started with the “Dear CEO letter” sent on 19 September 20181 by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to major banks and insurers supervised in the UK. The letter requested firms to submit a board-approved summary of the assessment of key risks in relation to the discontinuation of the London interbank offered rate (L)IBOR and the risk mitigation plan by 14 December 2018. The assessments and plans should consider a wide range of scenarios and impacts, and include a quantification of LIBOR exposures. Firms had to nominate the Senior Manager(s) taking responsibility to respond to the letter and to implement the transition plan.
Reforming the Swiss withholding tax system is key to strengthening the Swiss debt capital market. Recent developments such as the OECD’s Base Erosion and Profit Shifting initiative, which will complicate the use of offshore finance structures, and the upcoming expiration of the withholding tax exception for too-big-to-fail instruments make substantial changes to the Swiss withholding tax regime inevitable.
In the course of its meeting on 8 March 2019, the Swiss Federal Council took note of the findings of an expert board’s report with recommendations on the planned Swiss withholding tax reform. The report mainly aims at strengthening the Swiss debt capital market as well as securing tax honesty and rests on two main pillars: firstly, the abolishment of withholding tax on interest paid to Swiss corporate and all foreign investors and secondly, the introduction of a paying agent model combined with the expansion of the withholding tax regime to include income Swiss resident individual investors receive from foreign investments.
Deloitte recently hosted tax and compliance specialists representing 45 different financial institutions and banking solution providers for a dedicated training event, which addressed the technical and operational challenges associated with US tax reporting.
Via interactive sessions in Geneva and Zurich, participants were provided with an overview of the most common errors that Deloitte identified during the recent round of qualified intermediary (QI) periodic reviews and discussed the importance of Form 1042-S reporting and the associated reconciliation. Using real examples identified during the QI periodic review process, the session also provided participants with practical case studies and the expected Form 1042-S or Form 1099 output.
Although many of the participants could relate to the common documentation and withholding errors identified during the QI periodic reviews, most of the discussion focused on QI regulatory reporting and ensuring the correct Form 1042-S and Form 1099 output. This has been brought more into focus with the confirmation that the IRS are currently examining the US reportable amounts disclosed in the RO certification, against the amounts previously reported on Form 1042 for the review year.
So what were the key takeaways from our discussions?
Application programming interfaces (APIs) are the underlying infrastructure that forms the technological basis for open banking initiatives. In fact, the terms open banking and API banking are often used synonymously, which in such underlines the importance of open APIs. Open interfaces are neither new to the business world nor to incumbent banks. However, with the emergence of financial technology third parties, their innovative service offerings and recent regulatory push in certain regions towards accelerating innovation and competition, APIs have gained traction. Incumbent players in the financial ecosystem need to define their API approach; how they monitor relevant API standards is an imperative to stay competitive and innovative.
Ecosystems stellen Finanzdienstleister vor fundamentale strategische Herausforderungen. Eine neue Studie mit Finanzdienstleistern hat aufgezeigt, dass sich der Trend zu Ecosystems bereits etabliert hat und in naher Zukunft weiter an Bedeutung gewinnen wird. In diesem ersten Blog geben wir Ihnen einen Überblick über Erkenntnisse aus der durchgeführten Studie, welche wir in weiteren Blogs vertiefen werden.
The Swiss Common Reporting Standard (CRS) implementation set to change after Global Forum recommendations
The Swiss Federal Council began the consultation on amendments to the Swiss Common Reporting Standard (CRS) Law and Ordinance on 27 February 2019. The amendments follow recommendations made by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum). The consultation period lasts until 12 June 2019 and the amended CRS Law and Ordinance are scheduled to become effective as of 1 January 2021. Read on for an overview of the most important changes.
With both FIDLEG and FINIG expected to come into force on 1 January 2020, the ancestral business of Fund Managers and Asset Managers in Switzerland will face minor material changes, while the impact of FINIG is predicted to be more significant especially for Independent Asset Managers (IAMs). A substantial reorganisation will be required in order to meet the new licensing requirements. Despite the potential benefits afforded by a long transitional period, existing IAMs are advised to consider their transformation efforts early.
In July 2017, the Chief Executive of the UK Financial Conduct Authority (FCA) announced that firms should discontinue the use of the London Interbank Offered Rate (LIBOR) in favour of overnight risk-free rates (RFRs). Although registered and administered in the UK, LIBOR is a benchmark that underpins contracts affecting banks, asset managers, insurers and corporates globally. The transition must be completed by the end of 2021, as the continuation of LIBOR will not be guaranteed to market participants after that date.