The security risks of video and online identification

The digitisation of processes is a core issue for the Swiss financial industry. To create and elaborate the necessary regulatory framework, in December 2015 FINMA issued a draft circular governing the video and online identification of clients. In the meantime the final version of the FINMA circular has been published. In our first blog at the beginning of February we presented the draft FINMA circular on video and online identification. In the second we looked at the opinions expressed in the public consultation. In this, our latest entry, we address the concrete challenges involved in video and online identification.

Since 1 January 2016 the revised Anti-Money Laundering Ordinance has been in force. This has enabled FINMA to take account of new technologies designed to assure the requisite level of security in meeting the relevant due diligence requirements. FINMA also has to make this practice public, and has accordingly published the FINMA circular 2016/7 on video and online identification on 17 March 2016. The circular describes the due diligence requirements for intermediaries onboarding clients via digital channels without gaps in the information process. This is an opportunity for the Swiss financial industry to put the digitisation of business processes into practice. Our aim is to show where the risks lie and advise on how to deal with them.

Read more about the security risks here.

Further blogs
Read more about the digitisation of processes in the Swiss financial industry and about other key developments in this field in the next articles in our blog series on video and online identification.

If you´re interested in this topic or have any questions connected with it, please feel free to contact our experts:

Jens Probst
Director, Systems & Process
+41 58 792 29 59

Christian Hug
Senior Manager, Leader Information Governance
+41 58 792 23 66

Marco Schurtenberger
Manager, Cyber security & IT
+41 58 792 22 33

Withholding Tax: New Practice in Zurich for determining Swiss working days

As of 01 January 2016, the canton of Zurich has changed the practice for calculating Swiss working days for foreign / non-Swiss employees. As a consequence, the number of working days subject to wage withholding tax to be considered by the employers in Switzerland increases. This change affects all employers in Zurich with employees who are not tax resident in Switzerland and who are, thus, subject to wage withholding tax.

Previous practice valid until 31.12.2015

Previously, only the working days effectively rendered in Switzerland were subject to taxation. In this context, the only days considered relevant for tax purposes were (1) those on which employees physically worked in Switzerland; (2) sick days in Switzerland, provided the illness did not prevent the employee from leaving the country; and (3) presence days on which the performance of work duties was not possible due to exceptional circumstances. The respective Swiss working days were verified using a calendar.

New practice valid from 01.01.2016

The new publication also mentions that only the working days effectively performed in Switzerland shall be subject to taxation. However, for reasons of simplification, Swiss working days are now determined by assuming 20 fictitious working days per month and then subtracting the effective foreign working days. In this context, working days in a country other than Switzerland, as well as arrival and departure days on which all or the majority of the work was performed in a country other than Switzerland, are considered foreign working days. The respective foreign working days are to be verified using a calendar.

Consequences of the new wording in practice

Necessary documentation

To verify the foreign working days, the employee has to use a calendar, as before.

Scope of taxation in Switzerland

Based on the old practice, the gross income was allocated to a foreign country using the ratio between foreign working days and total working days. This led to paid non-working days such as vacation days and sick days being distributed proportionally to total working days performed in Switzerland and abroad and being taxed accordingly. The new rule leads to all paid foreign non-working days being subject to taxation in Switzerland.

Due to the wording chosen, there is an increased risk of double taxation of the respective income by both the country of residence and Switzerland.


The tax administration of the canton of Zurich is planning to review established rulings with respect to the new practice and to demand modifications, if deemed necessary. Future rulings have to follow the new regulation. In future, in exceptional cases, case-specific rulings are to remain an available option.

Our assessment

In view of the current federal court practice

In several instances, the federal court has determined that the liability to pay taxes in Switzerland requires the personal presence of the employee in Switzerland. Due to the simplified formula described above, however, the days subject to taxation include not only Swiss working days, but also foreign non-working days (such as vacation days and holidays), which stands in contradiction to current jurisdiction.

In view of the double tax treaties

With regard to earned income, the double tax treaties entered into by Switzerland limit the taxation right of Switzerland for non-Swiss resident employees to the income earned for working days actually performed in Switzerland.

Conclusion and next steps

The new regulation leads to a simplification of the procedure for the tax authorities. At the same time, however, the tax authorities expand the taxation right for Switzerland in a way, not in line with the current court practice and the double tax treaties in force. In addition, it can be assumed that other cantons might consider following the example set by the canton of Zurich, adjusting their practice accordingly.

There is no need for action in cases in which the employee has only one employer and works exclusively in Switzerland.

However, in case the employee works abroad on a regular basis or has multiple employers (in Switzerland and abroad), the consequences should be analyzed in more detailed. In case the new approach leads to a less favorable tax treatment or triggers an over-taxation or double taxation, it is recommendable to analyze the respective case and applying for a ruling confirmation. We will gladly support you in this.

Please contact our experts:

Brigitte Zulauf
PwC Zürich, Partner
Office: +41 58 792 47 50
Nathanael Frischkopf
PwC Zürich, Director
Office: +41 58 792 10 75
Christian Buchert
PwC Zürich, Director
Office: +41 58 792 97 83

The UCC and the exporter saga – myths, facts, latest developments – an opinion

The Union Customs Code (UCC) will be applied from 1 May 2016 and it carries some changes impacting not only EU, but also non-EU established operators. As discussions between the EU commission, businesses and public administrations shape up, it is becoming apparent that the changes will point to streamlining, rather than fundamentally amending EU customs rules.

A topic that received much attention recently relates to the definition of the exporter, the wording of which led to brainstorming with dubious outcomes.

So what is it all about?

Under the UCC, the definition of the exporter moved from a competency-based definition (i.e., the export declaration is to be lodged at the customs office where the exporter is established or where the goods are loaded for export) to a material definition (i.e., what the term ‘exporter’ means).

The new rules explicitly aim to align the rights and obligations of the exporter with the obligations deriving from the export control / dual-use regulations. This has already been the main reason for requiring an EU-established indirect customs representative in the past; nevertheless, it may not have been apparent from the wording of the legislation.

Customs administrations have however long been interpreting the requirements towards an exporter as twofold – namely the correct procedural handling/filing of documents and the responsibilities vested with an exporter in terms of securing and controlling its supply chain. The latter moreover in a way that allows EU authorities to take recourse against the exporter in the case of non-compliance. A non-EU established exporter is hard to catch nowadays.

These are the facts, but what is the myth?

On account of this change in the wording, discussions started to imply that non-EU established entities cannot export from the EU any more, despite having absolutely reasonable and legally stable supply chains.

Further suggestions pointed to a strategic long-term interlinking of the OECD BEPS movement and revision of the permanent establishment (PE) definition with the clear aim to create more/require PEs also for customs purposes. The alarm bells rang more and more loudly, from the lovely Swiss Alps all the way to Brussels.

You’ll find the full article on our CUSTOMised Blog.

India’s 2016 budget affects foreign investors and multinational enterprises

The Indian Finance Minister on February 29, 2016, presented the 2016 budget, the third budget released by the current government. The budget proposals would take effect after passing both houses of Parliament and obtaining presidential assent.

Changes included in the budget are:

  • Reduction of the corporate tax rate for domestic companies with total revenue not exceeding INR 50 million (approximately USD 750,000) to 29%.
  • The government is planning to conclude other tax incentives, amongst others the ‘super deductions’ for research and development.
  • To reduce the compliance burden, an amendment was proposed wherein a non-resident or a foreign company who is entitled to receive any income from India or amount on which tax is deductible shall be relaxed from applying PAN and furnish the same. Nevertheless, non-residents still would need to hand-in certain documentation and meet further conditions. The proposed amendment will take its effect from June 01, 2016. Until there is clarification about these parameters, we recommend still applying for a PAN.
  • To encourage indigenous research and development activities, the budget proposes introducing a 10% (plus applicable surcharges) tax rate on royalty income of an Indian resident. The 10% rate would apply only if the Indian resident develops and owns the patent, and the patent is registered in India.

Furthermore, India introduces a three-tiered TP documentation approach – including CbCR, which is largely in line with the BEPS Action 13 except some other provisions and significant penalties in case of violation. The new regime will cover financial years 2016-2017 and the first filing is due by November 30, 2017. The proposed measures also include specification on the affected taxpayers and filing information for members of group companies. Indian-headquartered multinational enterprises (MNEs) with global consolidated revenues exceeding the prescribed threshold (expected to be EUR 750 million) would be required to comply with the CbCR requirements.

Click here for the detailed newsletter regarding the three-tiered TP documentation.

Click here for the detailed 2016 budget newsletter and learn about its impact on foreign investors.

For a deeper discussion of how this issue might affect your business, please contact:

Norbert Raschle
Tel. +41 58 792 1652
Roger Wetli
Senior Manager
Tel. +41 58 792 4571


In September 2015, the modification of the Vaud income tax law (“LI”) has been voted by a large majority of the cantonal Parliament. Following said vote, two extreme left-wing parties launched a referendum against the revised bill. Last week end, the amendments of the bill have been approved by a surpringly vast majority of the voters (87% in favor of the new law).

The elements disclosed in the package that has been accepted can be summarized as follows:

1. Taxation of corporations

  • Abolishment of all privileged tax regimes granted at cantonal / communal level – i.e. mixed company tax regime as well as the holding tax status (provided in art.108, 109 LI). The abolishment of the articles will be effective as from January 1st 2019 onwards;
  • General reduction of the corporate income tax rate applicable at cantonal / communal level. The new rate will lead to a global effective tax rate (including federal, cantonal and communal levels), from January 1st 2019 onwards, of 13.79%;
  • Adaptation of the tax rates applicable to the “minimum tax” (art, 126 LI);
  • Harmonization of the capital tax. Regardless of the type of taxation applied to a company located in the canton of Vaud (art 118 LI), such entity will pay capital tax on the taxable equity at a rate of 0.06% to which communal multiplier will be applied (in general ranging from 2 to 2.5). The possibility to credit on the equity tax the income tax remains possible. This measure will enter into force from January 1st 2016 onwards.

2. Taxation of individuals

  • Rental values determination (deemed income for individuals owning real estate): modification of the lump sum deduction (increase from 20% to 30%) applicable to real estate aged over 20 years. The aim of this measure is to reduce the taxable amount resulting from owning real estate for a long period of time (measure aimed for retired persons to whom rental values represent an important income tax burden);
  • Increase of the lump sum deduction for health, life and accident insurance;

3. Taxation of individual who have the right to benefit from lump-sum taxation

Modification of the lump sum taxation principles as per the modifications voted at federal level. Such taxation principle is applied to non-Swiss resident who do not carry out any lucrative activities in Switzerland. Modifications are as follows:

  • Such regime will not be granted to persons with a Swiss passport. In the past, this was possible for a Swiss citizen to be married to a foreigner who was taking profit of this privileged tax regime and be granted with said regime. It was also possible to request such type of taxation regime for a Swiss citizen returning from abroad to Switzerland in the course of the first fiscal year following the return;
  • Requirements for the lump sum taxation will have to be met by both spouses;
  • Minimal lump sum amount to be determined as follows (maximal amount of the three values mentioned below and will be provided in art 15, al.3 LI):
    – CHF 400’000 of taxable basis;
    – 7 times the rental values of real estate owned;
    – 3 times the costs of lodging – amounts paid for living.
  • From January 1st 2016 onwards, lump sum taxation will also have to cover the wealth tax due by a lump sum taxpayer on its wealth attributable to Switzerland. In the canton of Vaud, it results in an increase of the minimal lump sum amount to CHF 415’000. If the determination as per the rental value or the lodging costs lead to a higher amount, percentage applied on such value or on such costs will be used to reflect wealth tax value in the determination of the lump sum amount.

4. Modification applicable to both corporations and individuals (admin matters only)

  • Payment of the taxes due. The system will be modified for corporations to align it on the one applied to individuals (monthly payment of corporate income tax amount – applicable for FY16 onwards);
  • Formal modifications of the Vaud tax law in order to reflect latest adjustments of the Swiss commercial code – formal requirements regarding the presentation of the financial statements of a company, etc.

5. Further modifications

The above mentioned bill does not include all elements currently under discussion at the federal level (Patent Box, Notional interest deduction, step-up mechanism). However, please note that there will be a transition clause that in case Vaud tax law has not legalized the step up, which will set up tax treatment of hidden reserves after abolishment of special regimes, or other federal tax reform elements into its Cantonal law as per 1 January 2019. Such transition clause will ensure that the introduction of the reduced tax rate and abolishment of special regimes as per 1 January 2019 in Vaud is aligned to the benefits to be introduced by federal tax reform timing wise.

A complete summary of parliamentary debates can be found on PWC newsletter.

Fully automated off- shore tax reporting for your private clients in Europe

Banking clients’ needs, and as a result the requirements placed on banks, have changed in recent years. Country-specific tax reporting is becoming ever more important for banks’ cross-border services. In order for a tax statement to be able to be used to prepare a banking client’s personal tax return, these regulations needs to take into account how the different forms of income and assets are taxed in the client’s country. Only then can a tax statement provide added value for the client.

In order to offer Avaloq banks a unique and quality product in this field, PwC is working closely together with the IT experts at Confinale, with PwC bringing the tax knowledge and Confinale the IT knowledge. Together we have developed off-shore reporting functionalities, which are fully integrated into the Avalon Banking Suite, for all important client markets.

Read the full Report here.


Please contact with any question about the report Dieter Wirth or your previous contact at PwC.


FinTech: Embracing the people opportunity

There has been a lot of talk about Financial Technology (“FinTech”) companies in recent months. The increasing use of technology to deliver financial services is not new, but recent advances in technology, digital security and processing power are unlocking opportunities for companies to completely rethink the way in which these services are provided, disrupting accepted business models along the way.

Many commentators to date have focused on the impact this will have on the provision of services and the structure of the market, but another important issue to consider is the people aspect. It is people, after all, who develop the innovative and groundbreaking solutions that will cause tremors through the industry.

But where should you start? If an organisation is to be successful in this new world, attracting and developing the right talent will be crucial.

People challenge What can HR do?
How do we develop the skills to be successful in this new market? Focus on innovation and agility to react quickly to change.Redesigned performance management to foster teamwork and “fail-fast” mindsets that promote innovation.Rethinking organisation structures to emphasise flatter, team based structures.
How do we remodel our own processes to attract talent? Develop 21st Century HR processes that deliver HR services through digital channels and cloud-based solutions across the employee life cycle.
How do we develop a FinTech-friendly employer brand? Develop a set of values that speak to innovative talent which is looking for a “grand challenge” to solve.Use events such as business incubators or “elevator pitch” investment programmes to engage with potential future talent.

Many of these changes relate to the culture of the business, something currently on the minds of FinTech start-ups as one of the potential barriers to effectively working with traditional businesses.


This week sees the release of “Blurred Lines”, PwC’s global survey looking to assess the attitudes and emerging trends associated with FinTech. This survey provides some great food for thought, both for existing FS organisations and for those wanting to get in on the action with their own start-up.

There is a great deal to think about in this area, and we will see significant changes in people processes across the industry in the coming years. This presents an exciting opportunity for HR to be a strategic partner to the business when leadership are defining their response and group strategy for FinTech. You can access our survey here.

If you’d like to discuss your plans for introducing FinTech with an expert, please feel free to contact Stuart Jones.

Electronic invoicing (e-invoicing) – A guide for organisations and institutions

Electronic invoicing (e-invoicing) has considerable advantages over conventional paper-based billing in terms of costs and working capital management. More and more public authorities and organisations from small businesses to multinationals are tapping into these benefits. Organisations that stick with conventional billing increasingly have to pay extra charges or are even barred from doing business with partners who operate electronically. Introducing e-invoicing does entail challenges, uncertainties and risks – but nothing that can’t be addressed with the right planning and implementation.

This brochure is designed as a guide to help people managing SMEs and institutions who are planning and implementing an electronic invoicing system. You’ll find a summary of the most important legal matters to consider, the pros and cons of e-invoicing, and the main risks. We also give recommendations on what to look out for when introducing e-invoicing, as well as the best way to proceed. Rather than addressing all the tax and commercial law implications in exhaustive detail, we’ve deliberately focused on the key matters relevant under Swiss legislation.

We would be happy to assist you and answer any questions you may have about the introduction of e-bills in an international context.

You’ll find the full guide here.

If you’d like to discuss your plans for introducing electronic invoicing with an expert, please feel free to contact our specialists:

Christian Hug
Information Governance
Telefon: +41 58 792 23 66

Jochen Richner
Tax Technology Solutions Leader
Telefon: +41 58 792 57 55

Christopher Oehri
Director, Assurance
Telefon: +41 58 792 27 57

And there’s more information on how to deal strategically with digitised documentation and data in the latest edition of our web magazine Disclose.

Recent Developments – The decisions of the National Council

After in February 2016 the Economic Committee of the National Council (WAK-N) had set the parameters for Corporate Tax Reform III, on 16/17 March 2016 the National Council (NC) discussed the bill.
The matters resolved by the NC are predominantly identical with the positions taken by the National Council Committee (refer to our News Alert with the results of the WAK-N here).

Decisions of the National Council
Read the decisions of the National Council on the Federal Law on fiscal measures to strengthen the competitiveness of the business location Switzerland ( short Corporate Tax Reform III ) in our current newsletter.

The next steps
The reform package now goes back to the Council of States, which will deliberate on the remaining differences in the summer session. If significant differences were to remain between the two councils, the reform would again be passed to the National Council for further reconcilement in the autumn session. Otherwise the final vote could be held already in summer. Provided that a referendum were not called against it, the CTR III could in that case come into force as early as 2017 and the required implementation in the cantons as early as 2019.

If you have questions, please contact your usual PwC contact person or one of PwC Switzerland´s experts in CTR III named below.


Andreas Staubli
Leader Tax & Legal Services Schweiz
Tel. +41 58 792 44 72
Armin Marti
Leader Corporate Tax Schweiz
Tel. +41 58 792 43 43
Benjamin Koch
Leader Transfer Pricing and Value Chain Transformation
+41 58 792 43 34
Daniel Gremaud
Leader Tax & Legal Romandie
+41 58 792 81 23
Claude-Alain Barke
Tax & Legal Romandie
+41 58 792 83 17
Remo Küttel
Tax & Legal
+41 58 792 68 69
Laurenz Schneider
Corporate Tax
+41 58 792 59 38

News on IFRS: March 2016

Our latest IFRS News provides perspectives on Alternative Performance Measures, IFRS 9 impairment and IAS 7 amendment.

Alternative Performance Measures

The use of Alternative Performance Measures (APMs) is widespread. A recent analysis of reporting practices in the UK FTSE 100 revealed a need for more transparency, especially under the light of the ESMA guidance applicable for all announcements after 3 July 2016. Jennifer Lau and Anna Schweizer from Accounting Consulting Services look into the details.

Read more…

IFRS 9 impairment

IFRS 9 introduces a new expected credit loss (ECL) approach to impairment provisioning for financial instruments: a radical move away from the current incurred loss model in IAS 39. Following the issue of IFRS 9, two bodies – the Basel Committee on Banking Supervision (the Committee) and the Enhanced Disclosure Task Force (EDTF) – have recently published guidance in respect of the ECL requirements in IFRS 9.

Read more…

IAS 7 amendment

Borrowings form a major part of nearly every business and operation. Information about changes in borrowings helps users of financial statements evaluate the financial health of an entity.

Read more…

Cannon Street Press

  • Insurance contracts
  • Goodwill and Impairment
  • Measurement of interests in associates and joint ventures
  • Non-current liabilities: conditions that are tested after the end of the reporting period
  • Financial Instruments with characteristics of equity

Read more… 

IC rejections

IAS 16 covers recognition, measurement, and disclosure of property, plant and equipment (PPE). Nine matters related to IAS 16 have resulted in an agenda rejection by the IC.

Read more…

In brief – A look at current financial reporting issues

IFRS in brief

  • Accounting considerations for Venezuelan entities – update as of February 2016
    Read more…
  • IAASB issues Invitation to Comment on Enhancing Audit Quality in the Public Interest
    Read more…
  • IASB issues a narrow scope amendment to IAS 7, ‘Statement of cash flows’
    Read more…