Today, on 1 July 2014, the Foreign Account Tax Compliance Act (FATCA) came into force. SIX facilitates its clients complying with the requirements of this US tax legislation and has itself complied with them fully.
Once FATCA comes into force non-American financial intermediaries (FFIs) must register with the US tax authorities (IRS) if they manage the financial accounts of US citizens and consequently report on these accounts to the IRS.
SIX is, as a Swiss central financial infrastructure service provider, affected in two ways by FATCA. Firstly as a depository for US securities for the Swiss market: SIX must ensure that all Swiss financial institutions that deposit their US securities with SIX continue to pay US income without penalty tax deductions. This is a central element in the competitiveness of this financial institution.
SIX has been registered with the US Federal Tax Authorities as a financial institute participating in FATCA since 14 April 2014.This also left the way clear for the seamless implementation of FATCA in all associated institutions and by their clients.
On the other hand SIX also offers, in its function as central data supplier, services which facilitate the implementation of FATCA by the financial institutions. A securities trade is technically executed by SIX in a few seconds with the right data. The service is extended to new data so that, among other things, the FATCA taxation of US securities can be processed. Thanks to this information the processing can be done automatically with no time-consuming manual intervention.
The financial infrastructure services thus contribute significantly to the simplification of compliance with FATCA requirements by financial institutions. FATCA is, at first sight, a great burden for the Swiss financial sector. However, it also represents an opportunity to prove its efficiency and adaptability to future regulatory requirements.
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