FINMA publishes Initial Coin Offering (ICO) guidelines

In its media release of 16 February 2018 the Swiss Financial Market Supervisory Authority FINMA published its long-awaited guidance on Initial Coin Offerings (ICO) which defines the minimum information required and principles for requests for negative clearance.

An ICO is a digital form of public fund-raising for entrepreneurial purposes. Blockchain-based “coins” or “tokens” are sold in exchange for cryptocurrencies (e. g. Bitcoin) or FIAT currencies. The token represents a certain value or service that the issuer defines prior to the ICO.

In its media release of 29 September 2017 FINMA already acknowledged the innovative potential of this technology and pointed out to intersections between ICOs and the applicable financial market laws. In its new guidance FINMA rightly points out that generalized statements with respect to the applicability of financial market laws is not possible due to the variety of tokens and ICOs. Instead, every ICO must be assessed individually on a case-by-case basis.

Types of token

FINMA basically distinguishes between three different types of tokens (although hybrid forms are possible):

  • Payment tokens: These are considered standard crypto currencies. They can be used as means of payment for the purchase of goods or services as well as for the transfer of money and values. They are not associated with any other functions or projects.
  •  Utility tokens: They provide access to a blockchain-based applications or services.
  • Investment tokens: These tokens represent assets (such as shares of companies, revenues or entitlements to dividends or interest payments). Depending on its design, this type of token is similar to a share, bond or derivative financial instrument.

Legal assessment

FINMA came to the conclusion that it is particularly the Anti-Money Laundering and securities regulations that are concerned with respect to ICOs. Conversely, the Banking Act (“BA”) and the Collective Investment Schemes Act (“CISA”) are typically not concerned.

Based on the functionality of the various tokens FINMA makes the following legal considerations with respect to ICOs:

  • Payment ICOs: Payment tokens fall within the scope of the Anti-Money Laundering Act (“AMLA”) but do not qualify as securities under the Financial Markets Infrastructure Act (“FMIA”) and the Securities Trading and Exchange Act (“SESTA”).
  •  Utility ICOs: Utility tokens are basically not qualified as securities provided that they are intended to provide access digitally to an application or service and may be used in this capacity at the moment of issuance. Conversely, if a utility token is also used for investment purposes it is qualified as security.
  •  Asset ICOs: Asset tokens are treated as securities by FINMA.

Combinations of the various types are also possible.

FINMA recognizes the innovation potential of ICOs and the block chain technology but also highlights risks that result for investors.

Contact Us

Günther Dobrauz
Leader PwC Legal Switzerland
+41 58 792 14 97

Tina Balzli
Head Banking
Legal FS Regulatory & Compliance Services
+41 58 792 15 54

Simon Schären
Legal FS Regulatory &
Compliance Services
+41 58 792 14 63

Mark A. Schrackmann
Assistant Manager
Legal FS Regulatory and Compliance Services
+41 58 792 25 60

Orkan Sahin
Assistant Manager
Legal, FS Regulatory & Compliance Services
+41 58 792 19 94

FINMA revises circular on video and online identification

On 18 March 2016, the Swiss Financial Supervisory Authority FINMA brought into force the circular 2016/7 “Video and online identification”. Since then, financial intermediaries have been able to identify new clients digitally, in addition to face-to-face meetings or the opening of a client relationship by correspondence.

In its media release of 13 February 2018, FINMA announced that due diligence obligations in the area of digital client on-boarding are being adapted to technological developments. The draft of the partially revised circular includes the following innovations in particular with regard to the digital identification of new clients:

Video identification

  • In order to ensure secure identification and make the use of counterfeit ID cards more difficult, financial intermediaries should now check at least three randomly selected optical security features of the ID documents (e. g. holograms, laser-tilt images, security thread, micro text, etc.);
  • The formal characteristics (e. g. layout, orthography, font, etc.) are to be compared with references from an identity card database;
  • The verification of the contracting party in the identity process using a one-time password (TAN) will no longer be required;
  • The identification process should now be allowed to continue even if there are indications of increased risks. However, the business relationship shall only be established after additional clarification and approval of a superior person/ management.

Online identification

  • Financial intermediaries should be encouraged to obtain a photograph from all relevant pages of the identification documents. Similar to video identification, the comparison with an ID card database should also be required for the online identification;
  • As an additional safety element, a liveness detection is required;
  • A money transfer from a bank in Switzerland shall no longer be a mandatory requirement. Under certain conditions, money transfers from banks in Liechtenstein or a member state of the Financial Action Task Force on Money Laundering (FATF) should also be sufficient.

FINMA holds a hearing until 28 March 2018. As soon as the revised circular will enter into force, financial intermediaries are required to adapt their video and online identification process within 6 months.

Contact Us

Günther Dobrauz
Leader PwC Legal Switzerland
+41 58 792 14 97

Tina Balzli
Head Banking
Legal FS Regulatory & Compliance Services
+41 58 792 15 54

Stephanie Kok
Legal FS Regulatory & Compliance Services
+41 58 792 48 94

Mark A. Schrackmann
Assistant Manager
Legal FS Regulatory and Compliance Services
+41 58 792 25 60

Successful Transactions with PwC


PwC Corporate Finance advises Thommen-Furler AG (“TFAG”) on the acquisition of alcosuisse ag (“alcosuisse”) from the Swiss government.

Zurich | On January 31, 2018, the Federal Council decided to sell alcosuisse ag, the former profit centre of the Swiss Alcohol Board and sole importer of ethanol products, to TFAG. PwC acted as lead advisor to TFAG throughout the buy-side process.

With the sale to TFAG, the Swiss government completes another important stage of the partial revision of the Alcohol Act, which started on January 1, 2017 by the transformation of alcosuisse from a profit centre to a limited company. The transaction is expected to be completed in mid-2018. Until the next stage in the revision process of the Act – the liberalisation of the ethanol market on January 1, 2019 – the monopoly for the importation of ethanol will remain unchanged and the buyer is not allowed to generate any profit until then.

For more than 100 years, alcosuisse has been providing the Swiss economy with high-quality ethanol products in over 50 different grades at cost-covering prices. With processing facilities in Delémont (JU) and Schachen (LU) and c. 38 FTEs, alcosuisse supplies over 1’500 Swiss-based customers with ethanol products.

TFAG, headquartered in Rüti bei Büren (BE), is specialised in the distribution of chemicals and lubricants, environmental technology, and the disposal and recycling of industrial and hazardous waste. With c. 250 employees, the medium-sized company generates revenues in excess of CHF 120 Mio. and operates branches in Ziefen (BL) and La-Chaux-de-Fonds (NE).

The PwC team

M&A Lead Advisory
Sascha Beer, Partner
Marco Tremonte, Director, Engagement Leader
Andreas X. Müller, Senior Consultant

Financial Due Diligence
Nico Psarras, Partner
Patrick Amstutz, Director
Vincent Lüscher, Manager
Daniel Lötscher, Consultant

Tax Due Diligence
Marcel Angehrn, Director

Pension Due Diligence
Roger Ehrensberger, Senior Manager
Andreas Schuler, Consultant

UPDATE: FinSA and FinIA: Commission for economy and taxes concluded its debation

The Commission for economy and taxes (WAK-S) concluded the debation relating to the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). This information has been released in the press today.

Thereby the WAK-S endorsed almost all proposals made by the National Council (Nationalrat). In particular, WAK-S has unanimously approved the possibility for the early entry into force of the Fintech provisions, and has also largely agreed with the National Council on the material provisions relating to Fintech. Thus, there is a good chance that the Banking Act will create a new license category for enterprises that accept public deposits of up to 100 million francs without investing or paying interest. For the new category of companies, simplified approval and operating requirements in the areas of accounting, auditing and deposit securities are to be applied.

However, the following outlines the most significant amendments and changes made to the resolution of the National Council:

  • As opposed to the proposal made by the National Council, WAK-S resolved that the threshold for the obligation to publish a prospectus for public offers of securities shall be increase from 2.5 million francs to 8 million francs.
  • Regarding the „door-to-door selling” (Haustürgeschäft) which is stated in the Swiss Code of obligations, the WAK-S endorsed by the majority to the proposal made by the National Council that the door-to-door selling of banking and financial services shall be exempted. However, the exception shall only be applicable to offers which have been made to existent clients of the financial institution or the bank.
  • The grand-fathering clause which is stipulated in the FinIA shall not be cancelled according to the WAK-S, as opposed to the proposal made by the National Council.
  • Regarding the financial market supervisory act, as opposed to the proposal made by the National Council, the WAK-S resolved that also persons and entities holding a qualified or substantial participation in a supervised institute shall provide the supervisory organization with all information and documents necessary for the performance of its duties.

The Council of States will now take over and could already be debating the topics in its spring 2018 session. Subsequently, the Commission for economy and taxes (WAK-N) as well as the National Council will deliberate, so that the bill has to pass the final hurdle before becoming enacted.

The document regarding comparison of the resolutions of the WAK-S is now available under the following Link.

Contact Us

Dr. Guenther Dobrauz
Leader PwC Legal Switzerland
+41 58 792 14 97

Tina Balzli
Head Banking
Legal FS Regulatory & Compliance Services
+41 58 792 15 54

Dr. Jean-Claude Spillmann
Head Wealth Management
Senior Manager
Legal FS Regulatory & Compliance Services
+41 58 792 43 94

Claudia Thalmann
Assistant Manager
Legal FS Regulatory & Compliance Services
+41 58 792 16 69

More appealing the regime of taxation of the Italian source dividends received by companies resident in Liechtenstein.

This is one of the implications arising from the recent inclusion of the Principality in the so called Italian “White List”.

The regime of taxation of the dividends paid by the Italian companies to companies resident in  Liechtenstein has become more appealing as a consequence of the recent inclusion of the Country in the Italian so called White List.

As a matter of fact, a preferential WHT (at rate of 1,20 per cent instead of 26 per cent) could be applied to the above-mentioned Italian source dividends, provided that some conditions are met.

a) Background.

(i) The Decree 9 August 2016 has significantly extended the number of countries included in the so-called Italian “White-list” i.e. a list of countries in which agreements allowing information exchange are in force.

(ii) In general terms, from a financial perspective, the inclusion in the White list has relevant consequences both on “incoming financial income”, i.e. paid by subjects resident in a white-list country, and on “outgoing financial income”, i.e. received by subjects resident in those countries, thus making it more profitable for them to invest in domestic financial activities.

In particular, by this article we will focus on the consequences on the tax regime of the Italian source dividends paid to the companies resident in the Principality of the Liechtenstein arising from the inclusion of the same Country in the Italian White List.

b) The preferential withholding tax.

(i)  In general terms, the dividends paid by Italian entities to non-resident entities are subject to the Italian withholding tax at rate of 26 per cent.

The above-mentioned WHT can be mitigated according to the Double Tax Treaty in force between Italy and the Country of the recipient[1].

(ii)   In addition, a reduced 1,20 per cent[2]  WHT applies on dividends paid to:

  • entities which are subject to a corporate income tax in an EU State Member or EEA and
  • belong to the White List.

In particular, the WHT at reduced rate of 1,20 per cent refers to the dividends accrued starting from FY 2017 and aid from FY 2018 onwards (previously a reduced 1,375 per cent WHT was applicable on dividends paid starting from FY 2008).

(iii) At this regard, please consider that, in light of the clarifications issued by the Italian Tax Authority, the tax  payer in order to benefit of the above-mentioned reduced withholding tax shall prove that[3]:

a) the dividends were paid after the year 2004;

b) the request of the refund was submitted within 48 months after each dividend payment;

c) the company receiving the Italian dividends is subject to corporation tax[4].

d) the company receiving the Italian dividends must not have recovered integrally (or claimed for the reimbursement) the withholding taxes suffered in Italy (by means of deduction from the tax due in the State of residence or by the refund of the tax credit) neither according to the internal law nor according to the provisions of the Double Tax Treatment.

e) the dividend distribution does not constitute an “abusive” transaction.

Furthermore, please consider that the Italian Tax Authority has clarified that the claimant company must held “non qualified” shareholdings according to the Directive 90/435/EEC of  July 23rd, 1990 (so called “Parent – Subsidiary” Directive)[5].

As a matter of fact, in the above-mentioned case, on the dividends paid by the resident subsidiaries to EU Parent companies is not applicable the withholding tax of 1,20%, but must be applied the “Parent – Subsidiary” Directive  which provides, on request, the full refund of the withholding tax.

c) The case of the Liechtenstein.

(i) In light of above, the receiving companies resident in  Liechtenstein could benefit of  WHT at rate  of 1,20 per cent  (instead of 26 per cent) on dividends paid by Italian companies since the above-mentioned Country (EEA member) has been now included in the Italian “White List”.

However, in order to benefit of the above-mentioned preferential tax regime, the receiving companies must be subject to a corporate income tax and also other above-mentioned conditions have to be met.

(ii) Otherwise, should the Withholding Agent (even if all above-mentioned conditions are met)  apply a WHT on such dividends at higher tax rate (eg 26 per cent) the companies resident in Liechtenstein could ask the Italian Tax Office for the refund of the difference between the applied WHT and 1,20%.

In case of any questions, please do not hesitate to contact us.


Martin Meyer
PwC Liechtenstein| Director
Office: +41 58 792 42 96
Mobile: +41 79 348 36 13
PricewaterhouseCoopers GmbH
Austrasse 52 | Postfach | FL-9490 Vaduz



Davide Settembre
PwC TLS Avvocati e Commercialisti | Senior Manager
Office: +39 02 91605608
Mobile: +39 347 1004237
TLS Associazione Professionale di Avvocati e Commercialisti
Via Monte Rosa, 91, 20149 Milano, Italy

[1] Please consider that there is no DTA in force between Italy and Liechtenstein.

[2] The Finance Bill for 2016 has provided a reduction of the corporate income tax from 27.5% to 24% with effect from 2017.

Following such reduction, starting from FY 2018 Italian dividends paid to non resident companies and entities which are subject to a corporate income tax in an EU State Member or EEA and belonging to the White List, will be subject to a WHT lower tax rate at 1.20% (instead of 1.375%)

[3] Please see the Circular Letter no. 26/E of 21 May 2009 and no. 32/E of July 8 2011.

[4] More in detail, the Italian Tax Authority has clarified that the foreign companies can invoke the more favourable regime when they are subject to taxation even if they concretely benefit of specific exemptions. Consequently the requirement has to be interpreted “as general liability to taxation” and it is satisfied even where the entity is generally/potentially subject-to-tax, but there is a specific exemption e.g. for the particular kind of income realized.

[5] More precisely, the claimant Company must held shareholdings different in respect of those held by the Companies (so called Parent Companies) which satisfy some subjective and objective conditions provided for by law and which have a minimum share in a company resident in another Member State (which meet the same conditions).

MIFID II requirements for direct electronic access (DEA)

Direct electronic access (“DEA”) enables a person to access a trading venue directly, using the trading code of an investment firm to do so, or directly placing an order with the Automated Order Routing (“AOR”) of the investment firm. This gives the client full control of the exact fraction of a second in which the order is placed and the lifetime of the order, as well as discretion as to which broker or trading venue the order is placed with.

Such discretion clashes with the objectives of MiFID II, which aims at increasing market transparency and oversight functions. Therefore, the regulation mandates the investment firm providing DEA to monitor the client closely.

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Contact Us

Dr. iur. Guenther Dobrauz
MBA | Partner, Leader PwC Legal Services Switzerland
Office: +41 58 792 14 97 | Mobile: +41 79 894 58 73

Michael Taschner
Senior Manager | PwC Legal Services Switzerland
Office: +41 58 792 10 87 | Mobile: +41 79 775 95 53

Yari A. Iannelli
Assistant Manager | PwC Legal Services Switzerland
Office: +41 58 792 28 54 | Mobile: +41 79 742 39 04

Dr. iur. Alexandra G. Balmer
Consultant | PwC Legal Services Switzerland
Office: +41 58 792 14 24 | Mobile: +41 79 267 81 04

MiFID II is live- What now?

Despite the launch of MiFID II early this year, there is still ongoing work to be completed and firms are expected to receive new information from the European Commission and the European Securities and Markets Authority (ESMA), even after the implementation deadline of 3 January 2018. Among other things, opinions for 700 pre-trade transparency waivers and for 110 commodity position limits have yet to be finalised by the regulators.

Therefore, firms should stay flexible to immediately implement new information by regulators and adapt and refine their compliance strategies to current regulatory updates regarding MiFID II.

The following key dates highlighted in a timeline shall give firms and their compliance specialists an overview over the current year and beyond.

View timeline

Contact Us

Dr. iur. Guenther Dobrauz
Partner |  Leader PwC Legal Services Switzerland
Office: +41 58 792 14 97 | Mobile: +41 79 894 58 73

Michael Taschner
Senior Manager | PwC Legal, FS Regulatory & Compliance Services
Office: +41 58 792 10 87 | Mobile: +41 79 775 95 53

Orkan Sahin
Assistant Manager | PwC Legal, FS Regulatory & Compliance Services
Office: +41 58 792 19 94 | Mobile: +41 79 238 65 69

Gregory Columbres
Assistant Consultant | PwC Legal, FS Regulatory & Compliance Services
Office: +41 58 792 18 41 | Mobile: +41 79 417 88 38

Successful Transactions with PwC


PwC Corporate Finance advises the shareholders of Addedo on the sale of the company to Talentia Software Group, a portfolio company of Argos Soditic, a Swiss-based private equity investor.

Zurich | PwC Corporate Finance acted as sole financial advisor to the shareholders of Addedo throughout the entire transaction process. The transaction has closed on December 20, 2017.

Founded in 2007 as a spin-off from Frango consulting services, Addedo has demonstrated an impressive growth and evolved to Switzerland’s leading distributor of and consultant for IBM Cognos Corporate Performance Management (CPM) software. More recently, Addedo has begun to access new markets by founding subsidiaries in Germany and Canada. In an attempt to promote further growth and tackle untapped markets, the shareholders of Addedo have explored the possibility to sell a major stake to a strategic partner.

With more than 3,600 customers in over 30 countries, Talentia Software is a market-leading European software provider of Finance software (Accounting, Financial Performance) and HR software (Payroll, Human Capital Management).

Viviane Chaine-Ribeiro, President of Talentia Software: “This acquisition is a new critical step in our external growth strategy. It will further reinforce our market lead on the fast growing CPM market and accelerate our growth in countries such as Switzerland and Germany. It will also enable us to set foot in North America where Addedo recently opened an office.”

Michael Kempter, President of Addedo: “We are pleased to join Talentia Software and merge our skills and capability. We share common values, including the commitment to delivering the highest quality of service to our clients.”


The PwC team

M&A Lead Advisory:

Dr. Martin Frey, Partner

Dr. Andreas Plattner, Director

Matthias Büeler, Senior Manager

Nikola Gozze, Senior Consultant


Circular letter 13 on securities lending and repo transactions

Amendments to preclude dividend stripping transactions (applicable as of 1 January 2018)

On Friday 29 December 2017 the Federal Tax Administration (FTA) issued a revised version of Circular Letter 13 on securities lending and repo transactions. The amended circular letter contains important changes to the previous practice of the FTA, notably with regard to the Swiss Withholding Tax (WHT) refund position of foreign resident borrowers of Swiss securities.

The issue:

Under the previous circular letter issued in September 2006, Swiss and foreign borrowers of Swiss securities receiving a dividend or interest payment were able to claim for a full or partial refund of WHT levied at a rate of 35% either on the basis of Swiss domestic law in case of Swiss borrowers or on the basis of an applicable double tax treaty.

This rule was perceived by the FTA as a cause of a market behaviour, which was not intended. Indeed, the old practice was intended by the FTA as a pragmatic approach to solve situations where a borrower had “over-borrowed” a position over the dividend ex-date. From the FTA’’s perspective, the old practice was, however, being abused deliberately by lending Swiss securities to foreign borrowers over the dividend ex-date, which in several cases led to perceived dividend stripping cases.

The impact for foreign borrowers:

As of 1 January 2018, the old practice, which generally provided for the possibility of refunding WHT to foreign borrowers of Swiss securities, is no longer applicable, irrespective of whether the transaction is a long borrowing transaction (i.e. the borrower or the last borrower in a chain of several borrowers keeps the share) or if the shares sourced under a securities lending transaction are sold or delivered to a third party (e.g. to cover delivery obligations from a short sale).

The new rules stipulate that a WHT refund in case of long borrowing (including in chain transactions where the last borrower keeps the shares) can only be claimed by the original lender. The original lender is, in our view, to be understood as the party that held the long position and that initiated the first transfer of the Swiss securities under a securities lending transaction. Further to this rule and as only the original lender can claim for a refund, he will receive a compensatory payment of 65% of the income payment subject to WHT. In order to be in the position to claim a refund of WHT under an applicable double tax treaty, the new circular letter introduces a new requirement, which is that the original lender can prove that the payment received from the borrower is effectively the original dividend. Although the circular letter does not further define this proof, it is the common understanding that this burden of proof can only be fulfilled if the borrower (or, in case of chain transactions, the ultimate borrower) provides the lender with the original dividend payment advice received by the borrower. Under this procedure, the borrower would no longer dispose of the original dividend payment advice enabling him to make a refund claim; instead, only the original lender now holding the original dividend payment advice would have this opportunity. This new procedure also requires the whole chain of the lending transactions to be disclosed, which may be a difficult task.

In transactions where the foreign borrower has sold or delivered the Swiss securities sourced via securities lending to a third party, e.g. to cover a short sale, the circular letter precludes both the original lender as well as the borrower from filing a claim for a Swiss WHT refund. In such circumstances only the final buyer of the shares shall be seen as entitled to a Swiss WHT refund under the applicable double tax treaty. This new practice may put the lender in a difficult situation, notably in chain transactions where his borrowing counterparty becomes lender to a subsequent securities lending transaction without his knowledge, as the original lender may no longer have control over whether his shares remain in the securities lending chain (resulting in a long borrowing situation for the final borrower) or if the shares are sold by the final borrower to a third party. In the first case, the lender may file for a refund claim, assuming that he is provided with the original payment advice by the final borrower (or through the chain of borrowers); in the second case no such dividend payment advice should be available, as the third party would have this document and the entitlement to a refund claim. Lenders should therefore review their contractual arrangements to either preclude delivery of lent shares to third parties in order to ensure their own right to file a refund claim.

The takeaway:

The old practice of Circular Letter 13 applying to foreign resident borrowers has been changed. Under the new practice, the right to claim a WHT refund would lie with the original lender to the extent that the borrower (or the last borrower in a chain of securities lending transactions) held a long position on dividend day, the whole lending chain was disclosed and the lender proved that he had received the original dividend payment from the borrower. If the securities were sold or delivered to a third party by the borrower, only the third party would be entitled to file a claim for a WHT refund, with no possibility for the original lender or the borrower to do so.

It is worth noting that the old rules have not changed in cases where the borrower is resident in Switzerland, as the borrower has to levy a second WHT on any manufactured payment he makes to a lender in order to be in the position to claim the WHT levied on the original dividend payment received. In addition, the circular letter also contains amended rules with regard to the Swiss individual and corporate income tax treatment of the different income flows resulting from securities lending transactions, including a general corporate income tax anti-abuse clause in connection with participation relief.

Do not hesitate to contact us, should you wish to further discuss.

Contact Us

Luca Poggioli
Director, Corporate Tax
+41 58 792 44 51

Victor Meyer
Partner, Tax & Legal
+41 58 792 43 40

Martin Büeler
Partner, Tax & Legal
+41 58 792 43 92

Sandra Barke-Baumgartner
Partner, Tax & Legal
+41 58 792 94 34

Free “Corporate Access” provided by brokers is an inducement under MiFID 2

Until recently, compliance departments of investment managers were busy to figure out how they will pay for research. With that being settled now, the topic of “Corporate Access” is moving up on the agenda.

The most critical question in that respect is if “free” corporate access provided by brokers is considered an inducement under MiFID 2.

We think the answer to that is quite straightforward. Read the full article to find out more.

Download here


Dr. Günther Dobrauz
Partner, Leader PwC Legal Switzerland
Office: +41 58 792 14 97
Mobile: +41 79 894 58 73

Michael Taschner
Senior Manager, PwC Legal,
FS Regulatory & Compliance Services
Office: +41 58 792 10 87
Mobile: +41 79 775 95 53

Orkan Sahin
Assistant Manager, PwC Legal,
FS Regulatory & Compliance Services
Office: +41 58 792 19 94
Mobile: +41 79 238 65 69