SWITZERLAND Law and Practice Contributed by: Peter Ch Hsu, Daniel Flühmann and Tiffany Ender, Bär & Karrer
tion of life insurance policies, where it amounts to 2.5% (Article 24 STA). Meanwhile, insurance and reinsurance turnovers are exempt from Swiss VAT (Article 21 paragraph 2 no 18 Value Added Tax Act). 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers General An insurance undertaking with a registered seat abroad engaging in insurance activities in or from Switzerland falls within the scope of the ISA (see 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance ), unless an international treaty provides otherwise (Article 2 paragraph 1 litera b ISA; see below) or an exemption under the ISA applies (eg, foreign insurance undertakings engaging only in rein- surance activities in Switzerland (Article 2 paragraph 2 litera a ISA)), regardless of whether conducted on a cross-border basis or through a Swiss branch office. Foreign insurance undertakings that have not estab- lished a branch office in Switzerland do not fall within the scope of the ISA, if their insurance activities in Switzerland exclusively cover: • insurance risks in connection with ocean shipping, aviation and cross-border transports; • risks located abroad; and/or • war risks (Article 1 paragraph 2 ISO). Furthermore, to safeguard the potential for innova- tions within the Swiss financial market, the Swiss Fed- eral Council can exempt insurance undertakings from supervision under certain conditions, for example in de minimis cases (Article 2 paragraph 5 litera b ISA). An insurance activity is deemed to take place in Swit- zerland, irrespective of the place and circumstances of the conclusion of the contract, if: • the policyholder or the insured is a natural person or a legal entity domiciled in Switzerland; or • the insured goods are located in Switzerland (Arti- cle 1 paragraph 1 ISO).
Foreign insurance undertakings that fall within the scope of the ISA are required to obtain a licence from FINMA prior to taking up insurance activities in or out of Switzerland (Article 3 paragraph 1 ISA) and are subject to ongoing supervision by FINMA (Article 2 paragraph 1 litera b ISA; Article 3 litera a Federal Act on the Swiss Financial Market Supervisory Authority). Compared to a Swiss-domiciled insurance undertak- ing (see 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance ), a foreign insur- ance undertaking seeking to obtain a licence to be active in or from Switzerland has to fulfil additional regulatory requirements (subject to differing rules in international treaties; Article 15 paragraph 3 ISA). It is, in particular, required to establish a branch in Switzerland and appoint a general agent ( Generalbev - ollmächtigter ) for that branch (Article 15 paragraph 1 litera b ISA). The general agent has to be resident in Switzerland and has to have the knowledge necessary to operate in the insurance business (Article 16 ISO). Furthermore, the foreign insurance undertaking has to comply with the additional licence requirements (see Article 15 ISA). International Treaties The EU Direct Insurance Treaty (Agreement of 10 October 1989) facilitates the access of EU non-life insurance companies to the Swiss market. While it does not exempt them from a Swiss licence require- ment in connection with the establishment of a Swiss insurance branch, relief is granted. Under the Liechtenstein Direct Insurance Treaty (Agreement of 19 December 1996), insurance under- takings domiciled in Liechtenstein may engage in direct insurance business in Switzerland either on a pure cross-border basis or through a Swiss branch office without requiring a FINMA licence. Brexit Switzerland and the UK concluded the UK Direct Insurance Treaty (Agreement of 25 January 2019) that guarantees freedom of establishment for non-life insurance undertakings operating in the field of direct insurance by converting the content of the EU Direct Insurance Treaty (Agreement of 10 October 1989) to apply to the bilateral relationship between Switzerland and the UK post-Brexit. The content of the UK Direct
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