• Service: Tax, Financial Services
  • Industry: Financial Services, Banking
  • Type: Newsletters
  • Date: 2/21/2013


Gerard Laures


Tel. +352 22 51 51 5549


Claude Poncelet


Tel. +352 22 51 51 5567


Frank Stoltz


Tel. +352 22 51 51 5520

FATCA e-alert - Issue 2013-05 

February 2013

Highlights of Swiss IGA


On 14 February 2013, the U.S. Treasury announced that it signed an Intergovernmental Agreement (IGA) with the government of Switzerland, making it the first Model II IGA to be signed. As stated in new Article 1 of the IGA, its objectives are to:


  • Implement FATCA with respect to all Swiss financial institutions
  • Ensure that all required information about identified U.S. accounts will be reported to the IRS
  • Remove legal impediments to compliance
  • Increase legal certainty by clarifying which Swiss financial institutions are subject to FATCA implementation
  • Reduce implementation costs including by suspending, under certain circumstances, certain withholding and account closing obligations
  • Simplify the necessary due diligence procedures.


Notable updates in the Swiss IGA as compared to the Model II IGA that was released in November 2012 are:

Articles have all been renumbered and two articles are new:

Article 1 – Objectives
Article 4 – Enabling Clause

Directive to Swiss financial institutions

Article 3 clearly states that Switzerland shall direct financial institutions (FIs) to register with the IRS by 1 January 2014 and agree to comply with the requirements of a foreign financial institution Agreement. Further, in Article 4, Swiss FIs must enter into an FFI Agreement with the IRS or register as a deemed-compliant foreign financial institution (DCFFI). This enabling clause permits FIs to do so without violating Swiss Criminal Code and not be liable to penalty.

Requirements for preexisting accounts identified as U.S. accounts

  • Request from each account holder, its U.S. tax identification number (TIN) and a consent, covering irrevocably the current calendar year and automatically renewed for each successive calendar year unless revoked before the end of January of such year
  • If the U.S. TIN and consent are not given, the Swiss FI will need to report and simultaneously inform the account holder, through a letter of the Swiss Federal Tax Administration, that:



Aggregate information about the account shall be reported to the IRS



Information about the account may give rise to a group request by the IRS for specific information about the account, and if that occurs



The account information shall be transmitted to the Swiss Federal Tax Administration



The Swiss Federal Tax Administration may exchange this information with the IRS in accordance with Article 5 of the IGA.

  • Report the aggregate information required with respect to non-consenting U.S. accounts to the IRS on an annual basis
  • Report the aggregate number and aggregate value of all non-consenting U.S. accounts no later than 31 January of the year following the year to which the information relates

Requirements for new accounts identified as U.S. accounts

Swiss FIs must obtain from each account holder identified as a U.S. account, a consent to report consistent with the requirements of an FFI Agreement as a condition of account opening.

Exchange of information

New requirements in Article 5 relating to group requests for exchanging information on non-consenting U.S. accounts or foreign reportable amounts paid to nonparticipating foreign financial institutions:

  • When the Swiss Competent Authority receives a group request with respect to non-consenting U.S. accounts or foreign reportable amounts paid to non-consenting NPFIs, the Swiss Federal Tax Administration will request the FI holding the information to identify the account holders or NPFIs concerned and provide to the Swiss Federal Tax Administration within 10 days the information described requested in accordance with Article 5, Paragraph 1.
  • The Swiss Federal Tax Administration will issue a final decision and notify the persons concerned about the decision on an anonymous basis by a publication in the Federal Gazette and on its internet site. The final decision may be appealed within 30 days after the publication in the Federal Gazette. The appeal must be lodged with the Swiss Federal Administrative Court. A copy of the appeal must be lodged with the Swiss Federal Tax Administration.
  • If the Swiss Federal Tax Administration considers the appeal to be unjustified, it shall, immediately and independently from delays set by the Court, submit its position to the Federal Administrative Court for decision. The Federal Administrative Court’s decision is final.
  • If the Swiss Federal Tax Administration considers the appeal to be justified, it shall reconsider its final decision and notify the Federal Administrative Court immediately and independently from delays set by the Court.
  • The Swiss Federal Tax Administration shall, within 8 months (formerly 6 months) of the receipt of a group request from the U.S. Competent Authority, exchange all such requested information with the U.S. Competent Authority in the same format in which the information would have been reported if it had been reported directly to the IRS by the reporting Swiss financial institution.

Liability for tax withheld by non-consenting U.S. accounts

If the appropriate exchange of information does not occur as described in Article 5, then a reporting Swiss FI will be required to treat the account as held by a recalcitrant account holder beginning 8 months after the request was received. The amount of tax withholding is clarified in Article 7 to be borne by the account holder.

Annex II:

  • Exempt Beneficial Owners: added International Organizations, as well as 7 categories of retirement funds
  • Deemed Compliant FIs(DCFI): like the final regulations, DCFIs were split in the Swiss IGA into registered and certified categories:



Registered DCFIs include new category for Swiss Investment Advisers. This category of registered DCFI is for an entity that solely renders investment advice to and acts on behalf of a customer, based on a power of attorney or a similar instrument issued by the holder of a financial account or based on investment powers in a directorship capacity for the purposes of investing, managing, or administering funds deposited in the name of the person or entity granting the power or issuing the similar instrument with an FI.


Certified DCFIs – In this new Model II classification of certified DCFI are non-reporting Swiss FIs (that are treated as certified deemed compliant foreign financial institutions for purposes of section 1471 of regulations), which are:

  • Any non-profit organization established and maintained in Switzerland for religious, charitable, educational, scientific, cultural or other public purposes that, by reason of its nature as such, is generally exempt from income taxation in Switzerland.
  • A Swiss condominium owners’ association established pursuant to Art. 712/(2) of the Swiss Civil Code.
  • Collective Investment Vehicles (CIV) – Similar to the final regulations, a CIV regulated under the laws of Switzerland will not fail to qualify as a deemed-compliant FFI, solely because the CIV has issued physical shares in bearer form, provided, amongst other conditions, that:



  • The CIV has not issued, and does not issue, any physical shares in bearer form after 31 December 2012, or,



  • If the CIV has issued any bearer shares after 31 December 2012, the CIV has redeemed all such shares prior to the entry into force of this Agreement.
  • Exempt products:


  • Retirement accounts or products held by one or more exempt beneficial owners



  • Vested benefits insurances according to Article 10 paragraph 2 of the Federal Vested Benefits Ordinance (FZV)



  • Restricted pension plan insurances (pillar 3a) according to Article 1 paragraph 1 of the Federal Ordinance on the Tax Deductibility of Contributions to Restricted Pension Plans (BVV 3)



  • Certain Other tax-favored accounts or products – accounts or products held by one or more exempt beneficial owners

For your reference

The IGA with Switzerland can be accessed here: IGA with Switzerland (PDF, 415KB).


For further information, please do not hesitate to contact us. 







Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.



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