Current Issues and Topics

In our bi-monthly update, we provide a detailed overview of the business relevant to our association. This includes the content of the transactions, the status and outlook of the political process and our positions. On this page you will find a brief summary of all business. The full update can be accessed via the button below.

Law Department

The draft for a Federal Law on the Transparency of Legal Entities seeks to enhance the integrity of Switzerland as a financial and business hub. The proposed measures include the establishment of a Federal Register of Beneficial Owners and other specific interventions to enhance the effectiveness of combating money laundering and white-collar crime. These measures are designed to align with the international standards set forth by the Financial Action Task Force and the Global Forum on Transparency and Exchange of Information for Tax Purposes.

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As per a report from the Federal Department of Finance (FDF), the Financial Market Infrastructure Act (FMIA) has, by and large, demonstrated its efficacy thus far. The Federal Council is presently undertaking a routine and comprehensive assessment, with a specific focus on enhancing transparency and legal certainty in designated regulatory domains. The consultation process for these considerations is slated to commence in mid-2024.

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On May 24 2023, the Federal Council endorsed the dispatch concerning the partial revision of the Cartel Act (23.047). The primary objective of this partial revision is to modernize Swiss Merger Control, aligning it with international standards. Additionally, the revision seeks to enhance Civil Antitrust Law and streamline the objection procedure for practicality. In connection with these goals, the Federal Council has directed the Federal Department of Economic Affairs, Education, and Research (EAER) to present a proposal for institutional reform in the first quarter of 2024. The Economic Affairs and Taxation Committee of the Council of States (WAK-S) initiated its deliberations during the same period. SwissHoldings explicitly appreciates the inclusion of the long-requested institutional reform in the revision.

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In the context of revising the Cartel Act, the reform of the competition authorities will be addressed separately, as urged by various stakeholders during the consultation process. This approach aims to prevent the revision of the Cartel Act from encountering obstacles again. The EAER, tasked with this responsibility by the Federal Council, intends to present a more detailed implementation proposal in the first quarter of 2024. Currently, several options are under consideration in collaboration with a specially appointed commission of experts.

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Tax Department

The G20-initiated project aimed at taxing the digitalized economy faces an uncertain future. Initial enthusiasm among G20 member states has waned. Regarding Pillar 1, it is increasingly evident that the new regulations may not materialize, as the USA is unlikely to ratify the required multilateral agreement. Without US participation, the desired redistribution of tax revenues from host states like Switzerland to market states such as China or India cannot proceed. The project’s second pillar, known as OECD Minimum Taxation, fares only marginally better. In early 2024, nearly all European countries began implementing Minimum Taxation, but economically significant nations like the USA, China, and India show no indication of embracing it. The potential election of Donald Trump as US President could bolster resistance to Minimum Taxation in the US and elsewhere. Specifically, the US might resist supplementary taxation of its tax base and the tax base of US companies abroad (e.g., in Switzerland) by threatening sanctions and insisting on significant adjustments to Minimum Taxation regulations. Consequently, Switzerland and its companies should prepare for a highly fragmented international tax landscape in the coming years. Given this context, the Federal Council should carefully evaluate future steps regarding Minimum Taxation implementation (e.g., introduction of the International Irrelevance Rule) and retain the flexibility to revisit decisions later to safeguard the Swiss economy. Past experiences indicate that Switzerland cannot prevail in tax disputes with major powers like the USA.

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Economics Department

Switzerland boasts an extensive web of Bilateral Agreements with the European Union (EU). The objective is to enhance and solidify the relationship between Switzerland and the EU through the revision of five existing agreements. While in parallel to the incorporation of two novel internal market agreements and collaboration in the realms of research, education, and health. However, the EU has tethered this progress in the agreement network to the clarification of the Institutional Framework. To achieve this and further develop and stabilize the relationship between Switzerland and the EU, a package approach is now employed. Instead of addressing institutional matters comprehensively in a horizontal agreement, these issues are now individually addressed in each sector-specific agreement. SwissHoldings welcomes the Federal Council’s endeavors to establish enduring and robust relations through a fresh set of agreements with the European Union (“Bilaterals III”). Concurrently, the association emphasizes the importance of comprehensively assessing the enduring implications of the swift enactment of legislation on Switzerland as a business hub before finalizing any agreement with the EU.

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In addition to regulated trade relations, the strongly export-oriented Swiss economy also relies on a broad network of Free Trade Agreements (FTAs). Switzerland has succeeded in continuously expanding this network in recent years. It is particularly pleasing in this respect that the Federal Council recently achieved a breakthrough in the negotiations for an FTA with India at the beginning of the year after 16 years. The signing of the agreement on March 10, 2024 in Delhi between the countries of the European Free Trade Association (EFTA: Switzerland, Iceland, Liechtenstein and Norway) and India after 16 years of negotiations is a significant milestone in Swiss trade policy and of great strategic importance for the Swiss economy. Switzerland is also negotiating further agreements with Vietnam, Mercosur, Malaysia, Thailand, and Kosovo. It is also working on modernizing existing agreements.

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The implementation of an Investment Review aims to forestall the acquisition of domestic companies by foreign investors, especially when such takeovers pose a threat to public order or security in Switzerland. In pursuance of this objective, the Federal Council endorsed the dispatch for an investment screening act on December 15, 2023. The primary focus of the investment review will be on investors under state control and domestic companies operating in particularly critical sectors. The Committee of the First Council will address this matter in the upcoming year.

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SwissHoldings closely follows the developments surrounding the investment agreements and emphasises the great importance of these agreements for Switzerland as a business location. With over 111 Bilateral Investment Protection Agreements (BITs), Switzerland boasts the third-largest network of such agreements globally. These agreements serve as a crucial pillar in enhancing Switzerland’s appeal as a business location. Currently, an agreement is being formulated with Indonesia, and SwissHoldings is actively monitoring the developments surrounding these investment agreements, emphasizing their significant importance for Switzerland as a business destination.

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The Responsible Business Initiative faced rejection at the ballot box on November 29, 2020, leading to the enactment of the indirect counter-proposal. Swiss companies are set to adhere to the new regulations for the first time in 2024, covering the 2023 financial year. Additionally, the Federal Council has indicated its intention to review the adaptation of laws in alignment with the EU’s evolving regulatory approaches in the realms of sustainability reporting and due diligence. A consultation draft on reporting is slated for release at the beginning of June.

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Switzerland is presently undergoing political deliberations on the potential expansion of its existing array of collective redress instruments. In December 2021, the Federal Council issued the corresponding dispatch for parliamentary consideration. However, from the business community’s perspective, the bill is not ripe for parliamentary discussion. The Federal Council’s proposal is criticized for approaching dispute resolution from a limited perspective, exclusively focusing on a specific procedural law instrument. It fails to consider international developments in recent years, new technological possibilities, and potential alternatives to court-based class actions.

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SwissHoldings diligently monitors developments in the realm of IFRS standardization. For its globally engaged members, the presence of a universally recognized reporting standard holds pivotal significance as the foundation for their own reporting. Following the convergence process with the US standard US GAAP, the evolution of standards has somewhat stabilized. Additionally, the IFRS Foundation’s newfound focus on ESG reporting is progressively assuming a more prominent role in the organization’s undertakings.

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In these unprecedented times, the Swiss National Bank (SNB) is increasingly drawing attention. Several motions have been addressed at the parliamentary level, aiming to link the SNB’s distributions to specific purposes. Additionally, recent proposals have surfaced advocating for a reform of the SNB’s governance structure. Ensuring the bank’s ability to operate independently of political interests is of paramount importance. The Swiss National Bank (SNB) operates under a distinct mandate: to uphold price stability, a critical factor in our prosperity.

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Archive

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SwissHoldings Update February 2024

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SwissHoldings Update July 2023

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SwissHoldings Update April 2023

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SwissHoldings Update December 2022

The SwissHoldings Update December 2022 provides an overview of current and upcoming business/activities of the office. Download...

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SwissHoldings Update October 2022

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