Switzerland has signed off on a final Fatca deal with the US, which will see exemptions allowed in areas such as domestic insurance and pensions schemes.
The two countries signalled work toward an agreement in mid-2012. It is this work that has resulted in a deal agreed by December 2012, and signed today, 14 February.
Foreign Account Tax Compliance Act (Fatca) legislation will require foreign financial institutions to set up processes for identifying US persons and their accounts, and subsequently reporting details along with relevant taxes withheld to US authorities – the US taxes its citizens on all assets wherever those citizens or their assets may be located globally.
The Swiss Funds Association (SFA) said it welcomed the news of the signing, as it will result in more legal certainty for Swiss firms. The deal also offers certain exemptions that Switzerland had sought for its domestic industry.
For example, the SFA said that Swiss retail funds may register as “deemed-compliant FFIs”, which means they do not have to register as participating FFIs.
“The agreement also clarifies the exemption regulations for social security and
pension institutions, and thus also for single-investor funds and qualified investor funds (QIFs), which are reserved for these institutions,” the SFA said.
“These funds are exempt from any registration. There are also certain exceptions envisaged with regard to reporting for Swiss players in the fund and asset management industry.”
Martin Thommen, president of the SFA, said the agreement provides security particularly in the areas of insurance and pension schemes, which affect the broader Swiss economy.
Matthäus Den Otter, SFA CEO, added that the agreement will reduce the forecast workload associated with Fatca implementation.