Pension funds subject
to stamp duty on all transactions
Pension funds in Switzerland will be subject to stamp duty on all stock market
transactions from 1 July 2001. In addition, pension funds with assets of at least
CHF 10m in securities will be henceforth treated as security dealers and thus
be forced to register as such with the tax authorities and fulfil a number of
administrative requirements. Pension funds that currently use a Swiss domiciled
money manager are already paying stamp duty on both Swiss (0.075%) and foreign
(0.15%) asset transactions, and so the new law will not affect them financially.
They will need to ensure that the manager(s) take the necessary administrative
steps. The pension fund will remain ultimately responsible towards the tax authorities
for compliance with regulations.
Other pension funds, such as those managed in house or using one or more foreign
external money managers, will face additional costs as a result of the stamp duty.
One alternative for reducing the effect of the stamp duty may be to use (Swiss
or foreign) collective vehicles which are not subject to the duty (but typically
have cost structures that are unattractive relative to custom mandates). In addition,
compliance with the new registration and administration procedures will need to
be ensured, including quarterly settlement of the stamp duty; in this regard,
use of a Swiss-based global custodian could facilitate this process. Pension funds
should ensure that they comply with the new rules as from 1 July 2001 and take
steps to analyse the impact on their cost structure.
The news contained in the
Newsbriefs section of The
Multinational is drawn from the News and Issues section of the Watson Wyatt website.
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