SWITZERLAND Law and Practice Contributed by: Johannes Bürgi, Roger Ammann, Lukas Wyss and Maurus Winzap, Walder Wyss Ltd
ited corporate purpose of the SPE and limited recourse and non-petition provisions to which counterparties to the SPE are asked to sign up to. In addition, all parties contracting with the SPE are asked to sign up to waiver set-off pro - visions. 6.5 Bankruptcy-Remote SPE See 6.4 Construction of Bankruptcy-Remote Transactions . The transfer of underlying assets that are fre - quently securitised in the Swiss market (such as auto lease receivables, credit card receivables and trade receivables) from the originator to the issuer is not subject to any transfer tax in Swit - zerland. However, it will need to be analysed on a case-by case-basis and typically advance tax ruling confirmations are obtained to confirm the tax treatment of the securitisation transactions. 7.2 Taxes on Profit 7. Tax Laws and Issues 7.1 Transfer Taxes Swiss domestic SPEs are generally subject to corporate income and capital tax. If the transac - tion involves a Swiss SPE, it is therefore, among other things, required that the additional entity- level corporate income and net equity taxes, which cannot be structured away completely, are kept at a (negligible) minimum. Due to a lack of specific tax legislation or tax guidelines, or both, securitisation transactions need to be presented and signed off by the relevant tax authorities by
35%. While Swiss withholding tax is generally recoverable, the process for doing so might be burdensome for non-Swiss investors and even a Swiss investor would suffer a delay in recovering the withholding tax. If an investor is located in a jurisdiction that does not benefit from favourable double tax treaties or does not otherwise benefit from treaty protection (such as tax-transparent funds), Swiss withholding tax might not be fully recoverable, if at all. Swiss withholding tax can be structured away if a non-Swiss vehicle is used. However, this adds much complexity to the structuring process because there will also be a strong focus on the true sale analysis from Swiss VAT should be analysed carefully in con - nection with securitisation transactions. For example, asset servicing may trigger Swiss VAT and, if the Swiss SPE holding the securitised assets is not registered for VAT purposes (and is not part of the VAT group of the originator), such VAT charge will constitute a leakage for the trans - action. Furthermore, if VAT-charged receivables are transferred to an SPE, such transfer may trig - ger an acceleration of the tax point for VAT pur - poses. In addition, the originator may be denied bad debt relief for non-performing receivables transferred. If future receivables are transferred at a time when the tax point for VAT purposes has not yet been reached, a potential secondary joint liability of the acquiring SPE with the trans - ferring originator may arise. Subject to careful structuring, these issues can be addressed and comfort can be obtained by advance tax ruling confirmations from the tax administration. 7.5 Obtaining Legal Opinions It is market practice in Swiss securitisation trans - actions that legal opinions are being provided, a tax perspective. 7.4 Other Taxes
way of advance tax rulings. 7.3 Withholding Taxes
Interest payments on debt instruments issued by a Swiss vehicle directly to multiple inves - tors attract Swiss withholding tax at a rate of
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