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We are glad to announce our new Swiss focused COVID-19 Tax & Legal impact website, which features a wealth of readily accessible content to help our Swiss clients manage and mitigate the risks associated with COVID-19.

 

The Swiss COVID-19 Tax & Legal impact website

In addition to the large scale health threat, the COVID-19 outbreak is heavily impacting economic activity, leading the Swiss government to take measures to help businesses deal with and mitigate the sizeable impact.  will be updated on a frequent basis so that you can stay in tune with the latest developments.

 

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Although LIBORs are currently among the most important reference rates in financial markets, their existence is not guaranteed beyond 2021, as previously announced by the FCA (which regulates LIBORs) and confirmed by numerous regulators across the globe. Market participants are therefore defining solutions to smooth the transition away from LIBORs. In particular, alternative reference rates (ARRs) have been defined and new products are being launched.

 

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Listen to the webcast EU Mandatory Disclosure Regime (DAC6) - Next Steps on Wednesday 18 March, 15.30 CET.

 

The 6th version of the EU Directive on administrative cooperation (DAC6) implements new mandatory disclosure rules for EU intermediaries and taxpayers in relation to certain arrangements. First reports will be required from July 2020 and the requirements apply to arrangements as far back as 25 June 2018. The timeline for compliance is very short and the penalties for non-compliance are high, so what response should your organisation have in place?

 

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In line with China's economic progress over the past decades, both public and private sectors have accumulated increasing amounts of wealth. The country has the fastest rate of wealth in the world, with four new billionaires per week. Mainland China has become the second largest market for wealth management in Asia Pacific, with a huge increase in accessible banking assets.

 

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The annual assessment from Deloitte’s EMEA Centre for Regulatory Strategy explores the regulatory themes that will shape the financial services industry in 2020. Our Centre’s predictions can help leaders anticipate the regulatory landscape in 2020 on topics such as LIBOR / SARON transition, climate risk, cyber resilience, prevention of financial crime, and market access.

 

The Swiss Financial Market Supervisory Authority (FINMA) inaugural public risk monitor report1 supports our view and cites these topics as ‘critical risks’ facing the Swiss financial services industry.

 

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On 16 December 2019, the IRS published Notice 2020-02 extending the transitional relief with respect to certain requirements under the Sec. 871(m) regime for another two years. This is good news for all financial institutions involved in the issuance, or trade, of financial instruments referencing US stock.

 

In addition, certain temporary provisions in the Sec. 871(m) regulations were finalised and published in the Federal Register on 17 December 2019. Similarly, final QI and FATCA regulations were published in the Federal Register on 2 January 2020. Overall, the regulations formalized pre-announced updates and there were no surprises.

 

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The latest amendment to the EU’s Directive on Administrative Cooperation (DAC6) requires EU intermediaries (and in some cases relevant EU taxpayers) to report to their domestic tax authorities on potentially aggressive or abusive cross-border tax arrangements (reportable cross-border arrangements or RCBAs). In parallel, certain jurisdictions are implementing the OECD’s mandatory disclosure rules (MDR), which essentially apply to arrangements coming within the hallmark D category of DAC6.

 

This blog discusses the impact of DAC6 and the OECD MDR on the trust and fiduciary sector and is part of a series designed to help our clients react to the new regulatory requirements.

 

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The transition from interbank offered rates (IBORs) to new alternative risk-free rates (RFRs) marks a historic turning point in financial markets. With cessation of LIBOR expected for the end of 2021, banks and other financial players need to focus on suitable transition planning. Swiss banks have already gained some experience in this regard, with the transition from the Tomorrow/Next Indexed Swaps (TOIS) fixing to the Swiss Average Rate Overnight (SARON); but the replacement of CHF LIBOR will be far more complex due to its importance as the basis for pricing Swiss loans. A large proportion of financial contracts referencing CHF LIBOR has maturity dates beyond 2021, so fallback provisions need to be high on the transition agenda  of Swiss banks, to ensure contract continuity.

 

The fallback framework developed by the International Swaps and Derivatives Association (ISDA), widely adopted by national working groups, has three component elements. The fallback description, including pre-cessation and cessation triggers, needs to be defined; and both term rate and spread adjustments need to be made, as a consequence of structural differences between IBORs and RFRs. While the focus of this blog is on spread adjustments for CHF LIBOR and SARON, the concepts described here can be applied generally to  other currencies such as the US dollar.

 

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