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Switzerland: Stamp transfer tax obligations of securities dealers

Switzerland: Stamp transfer tax obligations

The Swiss Federal Supreme Court—in a decision concerning the Swiss stamp transfer tax—addressed what is required to be identified as a “securities dealer” and what is the appropriate treatment of direct proxy relationships and the relevance of such information in the Swiss stamp transfer tax journal.

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Identification as “securities dealer”

The decision provides, in part, that all securities dealers (other than banks) must prove their status as a securities dealer by means of a valid identification documentation (that is, the blue securities dealer card).

The requirement that a securities dealer must pay one-half of the stamp transfer tax for another securities dealer is waived only if that other securities dealer provides a copy of its blue card either: (1) at the time of concluding the transaction, or (2) at the latest, three days after the transaction date. Any other form of identification as a securities dealer or a late attempt for “retroactive identification” as a securities dealer with presentation of the blue card (after three days from the date when the transaction was concluded) is null and void.

KPMG observation

The Swiss stamp transfer tax is based on the principle that a securities dealer is not required to pay half of the stamp transfer tax for another securities dealer. To comply with this principle and to avoid an unintended multiple burden of imposition of the stamp transfer tax, it has been noted that the Federal Supreme Court failed to allow an alternative form of identification as a securities dealer other than the blue card (such as proof of payment of half of the stamp transfer tax by the other securities dealer) or to allow retroactive identification as a securities dealer.

Direct proxy relationships and relevance of information in Swiss stamp transfer tax journal

The high court affirmed that the legal form of the transaction is relevant for Swiss stamp transfer tax purposes. When one party (a representative) acts in the name and on behalf of another (represented) party, and places orders to trade securities with a securities dealer, the transaction would be treated for stamp transfer tax purposes as though it were made by the represented party, assuming it is correctly reflected in the securities dealer’s Swiss stamp transfer tax journal.

In the present case, the securities dealer listed both the names of the representative (an asset manager) and the represented party (a collective investment scheme) in its Swiss stamp transfer tax journal and, based on the represented party’s stamp transfer tax qualification as an exempt investor, did not levy the one-half of the stamp transfer tax liability. The Swiss federal tax administration, however, denied the direct proxy relationship and instead deemed that stamp transfer tax was to have been levied.

According to the high court, the applicable law does not preclude securities dealers from naming the representative along with the represented party in the Swiss stamp transfer tax journal. The court also explained that it is impossible for both the representative and the represented party to be contracting parties to the same transaction. As a result, in situations when more than one party is named in the Swiss stamp transfer tax journal, the court held that during a stamp transfer tax audit, the tax administration must investigate (within reason) which party has the actual contractual relationship. This means that in the event of (possible) ambiguity in the Swiss stamp transfer tax journal, the tax administration cannot arbitrarily rely on the name of the party that would produce the greater stamp transfer tax charge without at least performing a reasonable investigation of the legal form of the transaction.

KPMG observation

Tax professionals have welcomed that the high court addressed and confirmed the relevance of the legal form of the transaction for Swiss stamp transfer tax purposes—as opposed to merely addressing the information contained in the Swiss stamp transfer tax journal—and that the tax administration has an investigative obligation beyond its examination of the Swiss stamp transfer tax journal. For direct proxy relationships, it is permissible for a securities dealer to list both the representative and the represented party in the Swiss stamp transfer tax journal, if applicable.


Read an April 2019 report prepared by the KPMG member firm in Switzerland

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