Far-reaching consequences of disruptive innovations for the Liechtenstein financial market

The Liechtenstein financial market has demonstrated its ability to adapt in recent years by keeping pace with changing framework conditions. Financial industry stakeholders manage more assets today than before the outbreak of the financial crisis. Liechtenstein remains as attractive as ever as a location for private banking and wealth management. The Principality of Liechtenstein is not the only country in which the financial sector is undergoing fundamental change. Digitisation is the main driver of this transformation, and banks are the hardest hit. More and more so-called “digital disruptors” are offering banking services without actually choosing to adopt a banking model themselves.

The challenge of digitisation

Customer behaviour and expectations have evolved. New competitors (e.g. FinTechs) and new technologies (e.g. blockchain) are provoking a fundamental shift in the business model of banks. Digitisation offers new opportunities, but also generates risks. Traditionally structured banks operate an integrated business. They sell products that they have developed themselves via their own distribution channels. All transaction and support services are provided internally. In contrast, new technologies enable a high degree of standardisation to be achieved, leading to a fragmentation of the value chain. According to the PwC Global FinTech Report 2017, 82% of the study participants questioned want to enter into partnerships with FinTech companies within the next three to five years. 77% expect blockchain technology to have become a part of their company’s productive system environment by 2020. Banks in Liechtenstein will not be able to escape this development. They need to carefully analyse the strategic options for action before putting appropriate measures into practice.

Attractive framework conditions

The government is supporting technological change by means of its “Impuls Liechtenstein” programme and the “Regulatory Laboratory” set up within the Financial Market Authority Liechtenstein (FMA). The FMA pursues a forward-looking regulation policy in line with European law. The team of experts from the Regulatory Laboratory advises financial intermediaries at the interface between regulations and the market. At statutory level, modifications have been made to banking legislation which permit the needs-based approval of service providers. Furthermore, there are specific statutory provisions applicable to payment and electronic money institutions. In addition, service providers and organisations benefit from private initiatives which help to establish extensive networking within the FinTech industry in Liechtenstein.

Healthy prospects

There are healthy prospects for overcoming the technological transformation. Liechtenstein as a financial centre has significant expertise in the field of finance, responds rapidly thanks to its short decision-making channels, and is capable of implementing practical solutions. This creates stability and legal certainty. These are good basic conditions to ensure its continued survival in a competitive environment in such fast-moving times. In the future, financial intermediaries will however be required to prove their ability to adapt more than ever before.


Claudio Tettamanti
PwC | Partner | Market Leader Liechtenstein
Office: +423 233 10 02
Mobile: +41 79 696 45 89
PricewaterhouseCoopers GmbH
Austrasse 52 | Postfach | FL-9490 Vaduz

U.S. tax reform includes important information reporting and withholding changes

The 2017 tax reform and reconciliation act (the Act), enacted on December 22, 2017, makes important changes to information reporting and withholding tax rules, including:

  • A change in the backup withholding rate from 28% to 24%;
  • A new federal tax withholding requirement relating to certain transfers of partnership interests;
  • New reporting requirements relating to:
    • the sale of certain life insurance contracts, and
    • the receipt of fines, penalties, and other amounts from certain taxpayers; and
  • Changes to various non-payroll withholding tax rates that are tied to individual and corporate income tax rates.

Observations: Taxpayers may need to implement changes immediately to their policies and procedures to conform to the new rules. Also, taxpayers reorganizing or restructuring in light of US tax reform should consider the impact the tax reform changes have on their tax withholding and reporting profile. Restructuring could cause changes in the source of income being paid or the status of a taxpayer (e.g., from non-US payor to US payor, or vice versa). Taxpayers should determine whether they are subject to new or additional tax withholding or information reporting obligations as a result of restructuring efforts due to US tax reform.

For more information on these updates, please see our recently published Tax Insight.

EU and the OECD considering TRACE / withholding tax simplification

On 30 January 2018, the European Commission held a public session to discuss the code of conduct issued by the Commission in late 2017 regarding increasing the efficiency of withholding tax (“WHT”) procedures. The code of conduct contains a list of measures for E.U. Member States to consider in terms of simplifying WHT procedures as regarding cross border income such as dividends, interest, and royalties. The code is a non-binding document which allows for voluntary commitment by E.U. Member States.

The measures considered includes, inter alia, (1) increased digitalization of WHT procedures, (2) provisions of refunds in a short period, and (3) relief at source. The tax relief at source suggestion includes the use of “authorized information agents and withholding agents” to facilitate the verification of entitlement to treaty relief, provision of pooled withholding tax rate information, and reporting of relevant information.

Such a tax relief at source solution resembles the OECD’s Treaty Relief and Compliance Enhancement (“TRACE”) project which started in 2009. TRACE envisages the use of Authorised Intermediaries to facilitate a more efficient and simpler application of treaty relief on cross border investments in a similar manner to the U.S. Qualified Intermediary regime. Although TRACE has not been implemented in any country as of yet, we understand that it may be reactivated soon especially given the work done at European Commission level in terms of the WHT topic.

Please refer to the following link for access to the European Commission Code of Conduct.


Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72

OECD Publishes Public Comments on Mandatory Disclosure Model

On 18 January 2018, the Organisation for Economic Co-operation and Development (“OECD”) published the public comments on the discussion draft on Mandatory Disclosure Rules for Addressing OECD Common Reporting Standard (“CRS”) avoidance arrangements and offshore structures (“Discussion Draft”). The OECD had published the Discussion Draft on 11 December 2017, requesting comments from interested parties and stakeholders by 15 January 2018. The Discussion Draft outlined a proposed model requiring mandatory disclosure rules, which ultimately intends to target promoters and service providers with a material involvement in the design, marketing or implementation of CRS avoidance arrangements and opaque offshore structures.

The public comments on the Discussion Draft came from numerous sources, including all of the Big 4 firm networks. In terms of input from Swiss sources, the Swiss Banking Association, Swiss Association of Asset Managers, Association of Swiss Private Banks, and the Swiss Insurance Association all provided comments to the OECD. The general feedback highlights the potential practical difficulties in the application of the model, mainly due to retrospective application of rules and definitions that are too broad at present for practical application. As a next step, the OECD will take these comments into account and present a report on the topic to the G7 Finance Ministers in mid-2018.

Please refer to the link for access to the public comments on the OECD’s Discussion Draft.


Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72

Swiss CRS Updates – January 2018

During December 2017, the Swiss Federal Tax Administration (“Swiss FTA”) and the Swiss State Secretariat for International Financial Matters (“SIF”) provided important updates regarding the Automatic Exchange of Information on financial accounts (“AEOI”) under the OECD’s Common Reporting Standard (“CRS”). Upon the completion of ongoing parliamentary work, the SIF updated the list of jurisdictions and territories with which Switzerland has agreed to exchange information under the CRS. In addition to containing Switzerland’s AEOI partner jurisdictions, the list also includes additional information, such as the date of entry into force of the various CRS agreements as well as specific distinctions between the different partner jurisdictions. The updated list distinguishes between states that:

  • have not yet submitted their partner state notifications. The AEOI will thus be activated at a later date;
  • have declared themselves to be “permanent non-reciprocal jurisdictions”, i.e. they will supply account information to the partner states on a permanent basis but will not receive such data;
  • do not meet the requirements of the global AEOI standard at present and have postponed the introduction of the AEOI.

Please refer to the following links for the updated list of Switzerland’s AEOI partner jurisdictions in German / English.

In addition to the above-mentioned updates, the “Questions and Answers to CRS” on the Swiss FTA website and the OECD “FAQs” were also updated in December 2017.


Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72

Synopsis of the most important regulatory developments in the banking and asset management industry

Status as of December 2017

Report also available in German

The most important regulatory developments with comments concerning important aspects/changes as well as status updates:

    • Interdisciplinary projects
    • Banks/securities dealers
    •  Fund management companies/investment funds/representatives of foreign  collective investment schemes



Bruno Gmür
Technical Partner Financial Services Banking
PwC Schweiz
+41 58 792 73 17

CRS Updates – December 2017

OECD Seeking Public Comments Regarding Mandatory Disclosure Model

On 11 December 2017, the Organisation for Economic Co-operation and Development (“OECD”) published a press release containing a mandatory disclosure consultation document which is open for comments from interested parties and stakeholders until 15 January 2018. Through the consultation document, the OECD is seeking input for a model requiring mandatory disclosure rules, and which ultimately intends to target promoters and service providers with a material involvement in the design, marketing or implementation of Common Reporting Standard (“CRS”) avoidance arrangements and offshore structures.

While tax transparency has significantly improved over the past decade, issues remain in regards to the widespread use of offshore structures to circumvent CRS reporting requirements, as highlighted by the release of both the “Panama” and “Paradise” papers. With the OECD’s proposed model, the rules would require intermediaries to disclose information on potential schemes to their local tax authority. Said information would then be made available to other tax authorities in accordance with the applicable information exchange agreement.

The OECD is now seeking public input from interested parties and stakeholders via the consultation document. The deadline for comments is 15 January 2018.

Please refer to the link for access to the OECD’s press release and consultation document.

Swiss CRS Update: Additional Agreements Approved by Chambers of Parliament

On 6 December 2017, the Swiss Parliament announced their approval of 41 additional partner jurisdictions starting on 1 January 2018 for the Automatic Exchange of Information (“AEOI”) under the CRS. After an initial rejection from one chamber of parliament, Saudi Arabia and New Zealand were also approved and are part of the 41 new partner jurisdictions. In addition to this announcement, the Swiss Parliament outlined strict and detailed requirement criteria for existing and potential Swiss partner jurisdictions. As part of this, the Swiss Federal Council will evaluate whether Swiss partner jurisdictions are compliant with the OECD CRS before Switzerland will exchange any information or data with them. The results of said testing will be communicated to the chambers of parliament.

Please refer to the link for additional details regarding the Swiss Parliament and Federal Council’s AEOI-related decisions.

Additionally, please refer to the link for a list of Switzerland’s current AEOI partner jurisdictions.


Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72

Intensified supervision of providers of collective investment schemes and their distributors – Questionnaire for monitoring of distributors of collective investment schemes

The Swiss Financial Market Supervisory Authority FINMA intensified the supervision of financial intermediaries in their monitoring of sub-distributors.

In that context, the Swiss Fund and Asset Management Association SFAMA has drawn up a questionnaire with the purpose of standardising the ongoing monitoring of distributors in accordance with the SFAMA Guidelines on the Distribution of Collective Investment Schemes that are applicable to main fund distributing entities as fund management companies, investment companies with variable capital (SICAVs), investment companies with fixed capital (SICAFs) and representatives of foreign collective investment schemes known as “Providers” and those distribution entities that are engaged by the Providers and licensed accordingly.

This questionnaire is another step towards the detailed requirements set out for distribution to retail and institutional investors at the point of sale by the Swiss Financial Services Act and Financial Institutions Act as equivalent regulation of the Markets in Financial Instruments Directive MiFID in the European Union.

The questionnaire contains information on the distributor, significant changes, confirmations/evidence and further requirements of the distributor and sub-distributor and their client classification. In line with specific requirements in distribution agreements, the questionnaire asks for further measures in respect of monitoring and clarifications relating to compliance with SFAMA Guidelines on the distribution of collective investment schemes.

To access all applicable documents and the new questionnaire of the ongoing regulatory monitoring of distributors, please click on the button below.

Read more

If you require further information and insights on current and future regulatory changes for providers and distributors of collective investment schemes in and from Switzerland, please contact us!


Sabine Bartenschlager-Igel, MIBL
PwC | Director | Att. at Law | Legal FS Regulatory and Compliance Services | Head Asset Management
Office: +41 58 792 2873
Email: sabine.bartenschlager-igel@ch.pwc.com

Anne Batliner
PwC | Senior Manager| Legal FS Regulatory and Compliance Services
Office: +41 58 792 2955
Email: anne.batliner@ch.pwc.com

Anikó Hajzer
PwC | Senior Paralegal Financial Market | Legal FS Regulatory and Compliance Services
Office: +41 58 792 1875
Email: aniko.hajzer@ch.pwc.com

Asset & Wealth Management Revolution: Embracing Exponential Change

Change in the asset and wealth management industry (the ‘AWM industry’) is now accelerating at an exponential rate. Although the industry is set for growth over the next ten years, asset and wealth managers must become business revolutionaries, even disruptors, if they’re to survive and prosper.
Now is the time for action.

Four interconnected trends will drive the AWM industry’s revolution. Between them, they will squeeze industry margins, making scale and operational efficiency far more important, and meaning that all firms need to integrate technology in all areas of the business and develop a clear strategy for the future.

These four transforming trends are:
1 Buyers’ market
2 Digital technologies: do or die
3 Funding the future
4 Outcomes matter

It’s difficult to predict how quickly these trends will play out. But they’ve been under way for some time and are accelerating. The difference is that firms must act now to fully understand them and adapt their business strategies accordingly.


Read the full report



Jean-Sébastien Lassonde
Partner, Swiss Leader Asset & Wealth Management
Tel: +41 58 792 81 46
Email: jean.sebastien.lassonde@ch.pwc.com

Latest Level 3 ESMA Q & As related to MiFID II/MiFIR

ESMA published and updated in the last couple of days additional Level 3 Q&A papers. Due to the specification and clarification purposes of the Level 3 papers, this should help you during the implementation phase and could clarify open questions. Please find the newly updated Q&As from November 10th, November 14th and November 15th 2017 below.

PwC provides you with this Newsletter an overview of the latest questions related to:

1. Record keeping
2. Post-sale reporting
3. Inducements
4. Transaction reporting
5. Direct electronic access (DEA) and algorithmic trading
6. The tick size regime
7. Multilateral and bilateral systems
8. General Q&As on transparency topics
9. Equity transparency
10. Non-equity transparency
11. Pre-trade transparency waivers
12. The systematic internaliser regime
13. Data reporting services providers
14. Third country issues


Read the full article


We are happy to discuss with you any thoughts and issues you may have. We are also happy to review your solutions with regard to MiFID II and MiFIR.

Please do not hesitate to contact us.

Guenther Dobrauz
Leader PwC Legal FS Regulatory and
Compliance Services
+41 58 792 14 97

Michael Taschner
Senior Manager
PwC Legal FS Regulatory and
Compliance Services
+41 58 792 10 87

Orkan Sahin
Assistant Manager
PwC Legal FS Regulatory and
Compliance Services
+41 58 792 19 94