Last Updated March 06, 2019

Law and Practice

Contributed By Homburger

Authors



Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

Under the current Swiss tax legislation, interest paid in respect of notes issued by an SPE resident in Switzerland is subject to Swiss federal withholding tax at a rate of 35%. While Swiss investors are used to the Swiss withholding tax, there is a limited market outside Switzerland only for debt instruments subject to Swiss withholding tax despite most of the double taxation treaties of Switzerland providing for a full refund of the Swiss withholding tax deducted. For that reason, securitisations involving Swiss originators and foreign capital markets use structures allowing the issuer to make interest payments free of Swiss federal withholding tax. This typically requires relatively complex structures, which may include structures using two SPEs, ie, a foreign issuer SPE and a Swiss intermediary SPE. There are ongoing discussions to change the Swiss federal withholding tax system from the current issuer-based system to a paying-agent system or to an exchange of information system. However, it is unclear by when and how the system will be changed.

Homburger

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lawyers@homburger.ch www.homburger.ch
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Authors



Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

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