As predicted in Banks Push for Stamp Duty Exemptions, the Swiss Parliament adopted a new federal law concerning stamp duty on securities transactions on December 15 2000 under an accelerated procedure. The law entered into force on January 1 2001.

Since January 1 2001 Swiss securities dealers no longer owe one-half of the transfer stamp tax for the following counterparties to a transaction:

  • foreign countries and foreign central banks;

  • investment funds in Switzerland that have been approved by the Swiss banking commission;

  • foreign investment funds;

  • foreign social security institutions;

  • foreign pension institutions; and

  • foreign life insurance companies.

Swiss securities dealers no longer owe one-half of the transfer stamp duty for foreign banks or stockbrokers which are counterparties to a transaction, as long as the dealers carry out the transactions (i) as members of a foreign stock exchange, and (ii) in securities that are traded on this foreign stock exchange. This applies to transactions carried out on an exchange as well as to off-exchange transactions where the Swiss securities dealer acts as intermediary or is trading in his own name. However, in the latter case the transactions must be reported in accordance with applicable stock exchange regulations.

The following example describes the new situation pursuant to Article 19(3) of the new federal law: if a Swiss bank A buys Nestle shares from a foreign bank B, bank A must carry out a breakdown for both parties. For bank A no transfer stamp duty will become due if the stock is commercial (if not, 0.75% is due). For the foreign bank B, again, no transfer stamp duty will become due, as long as the stock is traded on a foreign stock exchange (if not, 0.75% is due).

Contrary to the proposal of the Swiss Federal Council, institutions of contingency funds, social security funds or public Swiss powers such as the confederation, the cantons and towns will qualify as securities dealers under the new federal law from July 1 2001, and will therefore be subjected to Swiss stamp duty. However, these new securities dealers may delegate the execution of their fiscal obligations to professional traders such as banks.

For further information on this topic please contact Guy-Philippe Rubeli at Pestalozzi Lachenal Patry by telephone (+41 22 80 94 500) or by fax (+41 22 80 94 501) or by e-mail ([email protected]).

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