Financial Services Tax in Tax and Legal blog
- Select a blog category
Proposed changes to the Qualified Intermediary agreement introduce burdensome requirements to collect US TINs
This blog is the second of a two-part series and discusses the due diligence challenge linked to a Qualified Intermediary (QI) holding Publicly Traded Partnership (PTP) interests in custody for non-US investors as of 1 January 2023 when the new PTP withholding regulations come into force: the collection of non-US investors’ US TINs for purposes of §1446(a) and §1446(f).
You can access here our first blog in this series which addressed QI difficulties in complying with electronic reporting obligations via FIRE due to new US TIN requirements introduced for identity verification purposes.
Deloitte's Tax practice strengthens its capabilities for financial services, banking and insurance clients with two new key partners
Deloitte Switzerland is delighted to announce that two new partners, Ilan Rom and Petrit Ismajli, will join its Financial Services Tax team on 1 December. This intake marks the continued strategic expansion of Deloitte`s tax-related services and capabilities for clients across the banking, insurance and investment management sectors.
On Monday 24 October 2022 the Netherlands published draft legislation, including commentary, relating to the domestic implementation of the global minimum tax (“Pillar II”). Essentially the draft legislation closely follows the OECD’s Pillar II Model Rules as well as the EU’s Pillar II directive proposal, containing the Income Inclusion Rule (“IIR”), Undertaxed Profits Rule (“UTPR”) and a Qualified Domestic Minimum Top-up Tax (“QDMTT”). It is expected that the IIR and QDMTT will come into effect for in-scope groups that have financial years starting on or after 31 December 2023. The draft legislation is open for public consultation until 5 December 2022.
Join our Financial Services tax webinar on 9 November 2022 at 08:30 to discuss legislative developments, court cases and practice
We would like to invite you to our half yearly webinar where we provide key updates and discuss recent tax developments that are important for the financial services industry on Wednesday 9 November 2022 at 08:30.
On Sunday, 25 September 2022, the Swiss population rejected the withholding tax reform that sought to
- abolish withholding tax on Swiss bond interest payments
- partially abolish withholding tax on interest on bank accounts
- abolish securities transfer tax on the trading of Swiss bonds
The intention of the reform was to promote the Swiss debt capital market. Though the rejection of the reform means no legislative change, the current environment is rapidly changing with rising interest rates around the globe. In our view, it is therefore time to remind market players of what they need to consider with regard to withholding tax when issuing or trading Swiss bonds. A particular focus is made in this blog on the relevance of withholding tax in derivative transactions with notional Swiss bonds.
Public Vote Confirmed Swiss VAT Rate Increase and Rejected the Reform of Withholding Tax – What’s ahead?!
VAT rate changes in Switzerland are quite common, mainly to finance “governmental projects”. The last VAT rate change took place in 2018. Based on our past experiences, we would generally expect the Swiss Federal Tax Administration (“SFTA”) to set transition rules covering both the tax point and resulting invoicing, as well as reporting rules. The key aspects mentioned hereinafter (subject to final publication and confirmation) will have to be considered from VATable persons in Switzerland.
On Friday 9 September 2022 the governments of Germany, France, Italy, Spain and the Netherlands issued a joint statement confirming the intention to implement a global minimum tax (“Pillar II”). In essence, the statement mentions that even though EU-wide implementation of Pillar II is preferred (by means of an unanimously adopted EU Pillar II Directive), the countries will move forward with implementation even in the absence of an EU-wide agreement if such is not obtained over the coming weeks. The next ECOFIN meeting where Pillar II is on the agenda is scheduled for 4 October 2022.
Operational tax risk at financial institutions – preventing tax falling through the risk management cracks
A financial institution is faced with a broad range of local and international operational tax matters. Topics such as VAT, stamp tax duty, transfer pricing, tax accounting or tax transparency, just to name a few, have unique mechanisms and specific interactions with operational processes.
A survey conducted during a recent Deloitte FS Tax webinar indicates that, within most financial institutions,
(i) tax subject matters are not under the oversight of a single person or
(ii) tax risk is not consolidated into the overall risk management framework.
These results show that strong tax risk governance needs to be put in place to ensure that tax risk is not overlooked and such governance should embed a tax control framework.
Building a tax control framework requires the identification and evaluation of risks, notably by considering the following three jurisdictional touchpoints of (i) products, (ii) services and (iii) the client base.
In July 2021, the G7 and the G20 fuelled the OECD Inclusive Framework with the consensus on the introduction of a global minimum tax of 15%. The high pace of policy leads at the OECD continued well into 2022 with the GloBE Framework (Pillar I & II) published in October 2021, the GloBE Rules (Pillar II) in December 2021 and the extensive commentary providing further guidance (March 2022). While the initial momentum provided for ambitious implementation plans, different global crises and the complexity of the implementation work required have slightly stalled progress. However, recent developments have revitalised the domestic efforts to introduce GloBE Rules and various jurisdictions have published their plans recently – among others: Switzerland.
New US Tax identification number requirements create unworkable situations for Qualified Intermediaries
The IRS has recently announced a number of changes related to identification requirements impacting Qualified Intermediaries (QIs). This blog is the first of a two-part series and describes how the current design of the Secure Access Account (SAA), and in particular the request to provide a US Tax identification number to validate the QI’s Responsible Officials identity, would impair the QIs’ capabilities to comply with their electronic reporting obligations through FIRE. The second part of this series, covering QI’s new due diligence challenges linked to their non-US account holders’ US Tax identification number requirement for 1446(a) and 1446(f) purposes, will follow in a separate blog.