SWITZERLAND Law and Practice Contributed by: Nicolas Béguin, Joseph Merhai, Thomas Pasquier and Benjamin Vignieu, Aegis
2.6 Tax Regime Swiss and foreign CIS may be either tax trans - parent or opaque, depending on their form and features. Swiss contractual investment funds, SICAVs and LPCIs are tax transparent, and their income is directly attributed to the investors (and not to the fund, subject to certain requirements). As an exception, funds that directly hold real estate are tax liable. SICAFs and non-regulated companies are not tax transparent, meaning that the company is itself tax liable (in addition to shareholders for their income). A foreign CIS may be recognised as tax trans - parent from a Swiss perspective if the following conditions are met: • the distribution of its units in Switzerland has been approved by FINMA; • it is supervised by a recognised supervisory authority; or • the investment fund’s purpose is to offer opportunities for collective investment. Swiss tax authorities apply several criteria to assess this last condition. Swiss CIS are subject to Swiss withholding tax for their net income. Swiss-based investors may typically claim it back. Non-Swiss-based investors may potentially be exempt, subject to certain conditions. Certain criteria (ensuring in particular an effective management out of Swit - zerland) must be met in order for foreign CIS to not be subject to Swiss withholding tax. Finally, a Swiss stamp duty applies to the transfer of securities, including units of investment funds,
if a Swiss securities dealer is involved (among other conditions). The notion of “Swiss securities dealers” notably includes Swiss banks.
3. Retail Funds 3.1 Fund Formation 3.1.1 Fund Structures
Retail funds are structured as open-ended CIS and may be established as either a contractual investment fund or SICAV. Based on their invest - ment policy, these funds are classified as securi - ties funds, real estate funds or other funds for traditional investments. While SICAFs are permitted for retail funds, no such vehicles have been registered in Switzer - land since the introduction of CISA in 2007. The LPCI and L-QIF are not available to retail investors (Article 98, para 3 and Article 118a, para 1, lit a CISA). For further information on the fund structures available in Switzerland, please see 2.1.1 Fund Structures . 3.1.2 Common Process for Setting Up Investment Funds Please see 2.1.2 Common Process for Setting Up Investment Funds for details on the pro - cess involved in setting up open-ended CIS and SICAFs, which are available to retail investors. 3.1.3 Limited Liability Investors in open-ended funds are liable only up to the amount of their investment (see in par - ticular Article 36, para 1, lit c CISA). For con - tractual investment funds and SICAVs structured as umbrella funds with multiple sub-funds, each sub-fund’s liability is restricted to its own obliga -
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