On 25 June 2018, an amendment to Directive 2011/16/EU, commonly referred to as “DAC6”, came into force, which may have significant impact on Swiss entities. DAC6 requires the disclosure of certain cross-border tax planning arrangements by way of a reporting to the local tax authorities. While the rules do not apply in Switzerland directly, Swiss intermediaries may nevertheless be affected if they have operations or otherwise provide services in any EU country. Even purely Swiss intermediaries that serve EU clients should carefully consider the impact of DAC6.

Any person that designs, markets, organises, makes available for implementation or manages the implementation of a reportable cross-border arrangement (or that provided aid, assistance or advice with respect to such arrangement) is considered to be an intermediary. If it also fulfils one of the following criteria, it is directly captured by the mandatory disclosure rules set out in the DAC6:

• Resident in an EU member state
• Provides the above services through a permanent establishment in an EU member state
• Is incorporated or governed by the laws of an EU member state
• Is registered with a professional association related to legal, taxation or consultancy services in an EU member state.

For example, a Swiss bank which maintains branches in one or more EU countries will be directly affected and will be considered to be an EU intermediary by the new rules. Likewise, a Swiss consultancy firm that is registered with an EU-based professional services association falls within the scope of DAC6. Additionally, any EU-incorporated entity that has its place of effective management in Switzerland will still be affected, even though the entity is considered tax resident in Switzerland. In all these cases, Swiss entities are considered Intermediaries and will be required to report certain cross-border arrangements to the respective EU tax authorities.

In addition, one further requirement will have an impact on Swiss entities, even if they have no presence in the EU. DAC6 contains provisions that require a tax resident of any EU member state to report the arrangement, in case no intermediary does. This means that any Swiss entity that advises on cross-border arrangements involving an EU resident client should understand the client service impact and consider informing its client of his or her reporting obligations. Practically speaking any intermediary that serves EU clients should be familiar with the mandatory disclosure rules imposed by the EU.

Next steps for Swiss entities

Swiss headquartered groups should identify entities directly affected, including assessing whether a Swiss entity is active in an EU country. Next, a potential intermediary should perform an impact assessment to identify whether the services provided are in-scope of DAC6.

In our discussions in the Swiss market, Swiss intermediaries are struggling to articulate the impact and next steps to internal stakeholders. We recommend that a Swiss intermediary consider for internal stakeholder discussions the end client impact for cross-border arrangements involving an EU tax resident. 

Given that all relevant cross-border arrangements entered into after 25 June 2018 are in-scope, the time to act is now.

Markus Weber - Partner, Financial Services Tax Leader Switzerland

Markus heads the Financial Services Tax practice. He has more than ten years of experience in advising financial institutions in the banking, insurance and asset management sector, covering the full range of relevant taxes. Prior to joining Deloitte, he was the managing director of a fund management company, followed by a role as executive director in the group tax department of a leading Swiss bank, where he was responsible for compliance with cross-border U.S. tax regulations.

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Brandi Caruso - Partner, Financial Services Tax 

Brandi heads the Tax Transparency offering within the Financial Services Tax practice across Switzerland, responsible for services related to QI, FATCA, CRS, and 871(m). She is a technical advisor and a subject matter expert to a number of Swiss-based trust companies and banks and leads the Deloitte Trust Forum. She has more than 15 years of experience with Deloitte in the US, UK, and in Switzerland.

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Michael Grebe - Director, Financial Services Tax

Michael is a Director in the Financial Services Tax practice. He advises banks, trust companies, and insurers in relation to the interpretation and implementation of the global transparency related regimes. He has over ten years of experience in the financial industry covering a broad spectrum ranging from Process- over Project- to Product- Management. Prior to joining Deloitte, he led the FATCA and CRS implementation project for a global financial institution.

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Karim Schubiger – Director, Financial Services Tax & Legal

Karim leads the Tax Transparency team in the Suisse Romande and Ticino markets within the Financial Services Tax & Legal practice, responsible for services related to QI, FATCA, CRS, and 871(m). He is a technical advisor and subject matter expert to financial institutions in the banking, trust, and insurance sectors. Prior to joining Deloitte, Karim worked for eight years in support teams of Swiss banks, in particular in areas such as operations, project and change management as well as operational taxes.

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