Insights

The question of the extent to which cryptocurrencies and other virtual assets are reportable within the framework of the automatic exchange of information (AEOI) has preoccupied financial institutions for several years. At the end of 2022, the OECD adopted a draft for a system for reporting crypto assets, the so-called Crypto-Asset Reporting Framework, or CARF for short. What does the CARF contain and what are the reporting obligations?

Changes in commercial law effective January 1, 2023, result in various tax planning opportunities and increased flexibility. This is especially true for foreign-controlled Swiss companies.

The private law establishment is very popular due to her flexibility. The establishment in Liechtenstein has no counterparts in other legal systems. The establishment may be structured like a foundation or a corporation. The law defines the establishment as a legally autonomous, organized, permanent undertaking dedicated to economic or other objects and entered in the Commercial Register, which has holdings of material and possibly personal resources.

The Swiss “Aktiengesellschaft” or abbreviated “AG” (in English: “company limited by shares” / “Ltd.”) is the most preferred legal form of a Swiss company.

The Liechtenstein foundation is a legal entity without shareholders. A foundation has beneficiaries who are entitled to enjoy the foundation assets and/or income according to the will of the founder. The Liechtenstein foundation is used for asset protection and estate planning. The Foundation is regulated in art. 522 § 1 – 41 of the Liechtenstein Persons and Companies Act (PGR).

The Swiss “Aktiengesellschaft” or abbreviated “AG” (in English: “company limited by shares” / “Ltd.”) is the most preferred legal form of a Swiss company.

Liechtenstein is the only continental European country where the legal structure of a trust is known. With a trust, the settlor endows trust assets upon the trustee, together with the obligation to manage and use them in his own name and on the behalf of the rules in the trust deed.

The Swiss “Gesellschaft mit beschränkter Haftung” or abbreviated “GmbH” (in English: “limited liability company” / “LLC”) is the second most preferred legal form of a Swiss company. It is usually established in cases where the founders only have access to a limited amount for the company capital.

Two key amendments, in particular, will come into effect on 1 January 2023 as part of the AMLA revision: the obligation to verify the details of the beneficial owner and the obligation to update client details at regular intervals.

The new Swiss corporate law will enter into force on January 1st, 2023. The key changes are greater flexibility for share capital and equity distributions, enhancement of shareholders’ rights in terms of better corporate governance and modernization of shareholders’ meetings. The following provides an overview of the main innovations from a practical point of view.

Increase in maximum pillar 3a deductions in the 2023 tax year.

EU Directive 2019/1937 on the protection of persons who report breaches of Union law («Whistleblower Directive») entered into force on 16 December 2019. The Whistleblower Directive is intended to facilitate the disclosure of breaches of EU law and guarantee a uniform, high level of protection for whistleblowers throughout the entire EU. It has far-reaching consequences and is also relevant for Swiss companies with a presence in the EU area.

On 4 May 2022, the Swiss Federal Council decided to amend the ordinance on the reporting procedure in group relationships regarding withholding tax. The notification procedure allows the payment of withholding tax with subsequent refund to be waived in favour of a notification in the group relationship. The new version will come into force on 1 January 2023. How can the changes have a positive impact on Liechtenstein structures with Swiss underlyings and what should be considered?

As crypto-currencies are currently still little regulated and their value fluctuates relatively strongly, this not only entails certain business risks - there are also risks in the audit of the financial statements, for example the valuation uncertainty. If a company holds a significant part of its assets in cryptocurrencies such as Bitcoin or Ethereum, there are several things to consider. In addition to the profession of auditing, specific knowledge about the crypto ecosystem and blockchain is necessary. In the article "Cryptos challenge auditors", Christian Bögli and Michael Merz explain which audit risks exist for companies with cryptocurrencies and how they can be minimised.

Based on a people’s decision of 25 September 2022 the Swiss VAT rates are going to be increased. The increase of the VAT rates is planned to become effective as from 1 January 2024.

As per January 1, 2023, some improvements to the notification procedure for Swiss withholding taxes will enter into force.