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Jeannine Müller

Harun Can

Financial developments and impact of the FIDLEG/FINIG


Workshop on the occasion of the ISIS) seminar of 24 September 2020 entitled "Value Added Tax. Current. Compact. Interdisciplinary."

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Case 1 - Sale and management of mortgages

1.1 Facts of the case

The Bank is a profit-oriented universal bank (hereinafter referred to as "Bank"). It is entered in the value added tax register. As a pension fund, the purpose of B. PF is to provide occupational benefits within the framework of the BVG (hereinafter "PF"). It is also entered in the VAT register. In connection with the PF's plans to expand its mortgage lending business, the Bank and the PF concluded two agreements on 18 September 2016: In the "Agreement on the purchase of mortgages", effective 1 January, they regulated the transfer of mortgage claims from the Bank to the PF, including the transfer of loan collateral, the calculation and remuneration of the purchase price and the selection criteria for the purchase of mortgages. The del credere risk is transferred to the PF. The bank receives the loan amount paid by the PF for the sale of the mortgages. The PF does not pay interest to the bank, nor does the PF deduct a discount for the purchase of the valuable loans.

In a second "Agreement on the management of mortgages", they agreed that the invoicing, dunning, collection and recovery of the transferred mortgage claims and the possible realisation of loan collateral would continue to be handled by the bank as administrator; in return, the bank would receive a "servicing fee".

1.2 Questions

  1. What are the VAT consequences of the bank's management of the mortgage loan receivables prior to the transfer?
  2. What VAT consequences does the agreement on the transfer of mortgages have for the bank, the PF and the mortgage debtor?
  3. What VAT consequences does the agreement on the management of mortgages have for the bank, the PF and the mortgage debtor after the transfer?

2nd case 2 - Co-insurance

2.1 The facts of the case

A. receives substantial cost premiums/management commissions from coinsurance. The contractual starting position is as follows:

When drawing up insurance contracts, the taxpayer has implemented the model recommended by the Swiss Insurance Association (SIA) since 2005. Accordingly, A. issues a policy to the domestic policyholder for the total amount of the risks jointly assumed by the co-insurers. The policy of such a co-insurance differs from that of an insurance in which only one insurance company is involved, namely by an inserted paragraph "Co-insurance" in which it is stated

"In accordance with the wishes of the policyholder, the insurance is divided among various domestic insurance companies. Each insurance company is only liable for its share. The policyholder has designated A. as the leading company for the execution of the contract. In all matters concerning the insurance contract, the policyholder will deal exclusively with the leading company. The decisions of the [leading company] regarding the assumption of liability, recognition of the payment obligation for insurance benefits due, the payment of profit shares, etc. are binding on the other co-insurers.

The Insured authorises the [Leading Company] to claim the cost premium for the processing of the contract included in the total premium. The [Leading Company] shall transfer to the Co-insurers the premiums corresponding to its quota after deduction of this cost premium. The [Leading Company] shall instruct the [Insured] to forward all documents and information in connection with the coinsurance to the other Co-insurers in order to ensure the smooth running of the coinsurance relationship. The details and the technical processing of this data exchange shall be regulated by the co-insurers among themselves.

However, only taxpayer A appears as the issuer of the policy. Likewise, the general insurance conditions and the supplementary conditions of A. apply exclusively to the co-insurance relationship.

The conclusion of a coinsurance policy or the issue of the corresponding policy is preceded by contacts between A. and the co-insurers in question. If the Co-insurers agree on the most important elements of the contract (cost premiums claimed by A. as the leading company, insured companies, insured interests and risks, place of insurance, deductibles, profit sharing, maximum loss estimate, annual premium, commencement and duration of the contract, termination rights, co-insurance share, any broker, yield, other specialities), they give written undertakings to the leading company. Only then is the leading company authorised to sign the contract on behalf of the insurers (cf. A.'s working instructions on coinsurance contracts, para. 1.6 f.).

As far as the payment flows are concerned, the policyholder transfers the total premium plus stamp duties to A. as the leading company. The total premium is composed of the so-called risk premium, which is calculated taking into account the probability of loss and the possible loss amount, and the cost premium, which covers administrative and operating costs and other administrative expenses of the insurance. The leading company passes on the net premium corresponding to the participation ratio (i.e. pro rata total premium [excl. stamp duty] less cost premium) to the respective co-insurers. In other words, A. collects the total cost premium, which corresponds to a certain percentage of the total premium, and its share of the so-called risk premium for itself. The remaining share of the risk premium is passed on to the co-insurers. There is no cash flow from the coinsurers to A. In the event of a claim, A. covers the total loss in advance, i.e. it transfers the entire loss amount to the policyholder and, in the following quarter, settles the loss amount to be borne by the co-insurers against any premium payments.

The facts can be graphically represented as follows:

Seminar "Value Added Tax Developments in the financial sector and effects of the FIDLEG/FINIG Jeannine Müller Harun Can cases and solutions Zurich ISIS ZSIS

2.2 Question

Does the deducted cost premium of A. as the leading insurance company constitute remuneration for taxable services?

3rd case 3 - emission rights

3.1 Facts of the case

A climate protection organisation intends to transfer CHA certificates to third parties in Switzerland.

The Federal Office for the Environment (FOEN) issues certificates called CHA (hereinafter referred to as CHA Certificates) for CO2 reduction services provided within Switzerland.

Examples of such certificates can be found here: H6MDFP48SQOL0R08R8G.

The legal basis for these certificates is Article 7 of the CO2 Act. This provision provides for the certification of voluntary domestic emission reductions. The requirements and the procedure for issuing the certificates are regulated in Art. 5 to 14 of the CO2 Ordinance (SR 641.711, as of 19 February 2019).

These CHA certificates can be sold by the Swiss project company to a Swiss company subject to compensation (e.g. a fossil-thermal power plant or a fuel importer).

CHA certificates for emission reductions through projects and programmes in accordance with Art. 7 of the CO2 Act are not equivalent to internationally tradable certificates or CHA certificates issued in Switzerland. CHA certificates are not internationally recognized and therefore not fungible with Kyoto certificates.

CHA certificates are entered in the Emissions Trading Registry (EHR) and transferred. The Swiss Emissions Trading Registry is an online booking system operated by the FOEN. It ensures that the generation, allocation, credit, transfer, acquisition, cancellation and return of units as well as auction bids are accurately recorded. The Emissions Trading Registry can be compared with a land register. All units exist only in electronic form. Trading itself is organised by the private sector. Emission allowances, emission reduction certificates and CHA certificates issued by Switzerland and by companies participating in emissions trading are recorded in the Swiss Emissions Trading Registry.

Trading is carried out exclusively bilaterally between the few plant operators and any intermediaries (cf. dispatch of 1 December 2017 on the approval of the agreement between Switzerland and the European Union on linking emissions trading systems and on its implementation, BBl 2018 411, in particular 416 on section 1.1).

3.2 Questions

  1. Is the transfer for consideration a taxable supply under Article 18 of the VAT Act to which the exception under Article 21(2)(19)(e) of the VAT Act does not apply?
  2. What are the adjustments currently announced by the FTA in the area of emission rights based on the BGE 2C_488/2017 of 9 April 2019?

4th case 4 - FIDLEG / FINIG

4.1 Facts of the case

The FIDLEG was newly issued.

At the same time, Art. 21 para. 2 no. 19 lit. f VAT Act was also amended as follows as of 1 January 2020.

Excluded from the tax:

f. the offering of units in collective investment schemes pursuant to the Collective Investment Schemes Act of 23 June 2006 (CISA), and

the management of collective investment schemes in accordance with the CISA by persons who manage or keep them, the fund management companies, the custodian banks and their agents;

All natural persons or legal entities to whom the collective investment schemes may delegate tasks in accordance with the CISA or the Financial Institutions Act of 15 June 2018 are considered as authorised representatives;

the offering of units and the management of investment companies with fixed capital pursuant to Article 110 CISA shall be governed by point (e);

4.2 Question

Which passages in MBI 14 need to be adjusted due to the new FIDLEG and the revised CISA?


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