SIX ready for FATCA
On 1 July 2014, the Foreign Account Tax Compliance Act (FATCA), a US tax act that applies primarily to what it calls Foreign Financial Institutions (FFIs), enters into force. Even before the official launch of the FATCA program in January 2012 it was clear to SIX as a group that we would fully comply with FATCA and provide our clients with all the services they would need to comply with the provisions of this act.
As the operators of the Swiss financial market infrastructure and providers of comprehensive services throughout the world, SIX and many of its subsidiaries are directly affected by FATCA. Our legal entities with bank status are classed as FFIs and are therefore subject to the provisions of FATCA. While this applies in particular to
SIX SIS Ltd, the holding companies SIX Securities Services Ltd and SIX Group Ltd also fall under FATCA.
Special project teams across our various business areas are now actively engaged in checking the possible impact of FATCA on the Group.
SIX Securities Services – A key step
SIX Securities Services has taken the clear decision to implement the FATCA regulations together with the requirements resulting from the FATCA Agreement between Switzerland and the USA (Intergovernmental Agreement, IGA). The focus has been and continues to be on identifying clients, a possible withholding tax on US-sourced payment and the reporting on US-taxable persons.
In this context, all legal entities under SIX Securities Services have now been checked. These checks have revealed that SIX SAG Ltd also carries out FATCA-relevant transactions.
In order to meet the obligations with respect to the FATCA withholding and reporting, it was necessary to expand the IT core system SECOM. These system changes were carried out in SECOM on the weekend of 16/17 November 2013. Having achieved this milestone, SIX SIS Ltd is now ready to apply FATCA from 1 July 2014.
The functionality for compliance with the potential penalty taxes (withholding tax) is already being implemented in full. In principle, this means that our FATCA non-participating clients can continue to benefit from our services.
The US tax reports, which must be produced for the first time in March 2015, is being prepared in line with the definitions from the IRS.
In addition to this focus on our clients, SIX SIS will be publishing its custodians’ tax statues. This transparency allows our clients to settle their transactions in the required FATCA-compliant markets. A survey of our custodians shows that over 95% will be FATCA-compliant.
- SIX SIS Ltd is identified as an FFI due to its bank status, account structure and business activities. In order to make the necessary adjustments for the implementation of FATCA, the business area has analyzed all their processes closely and have now clearly established that FATCA mainly affects the client identification and implies changes to the onboarding processes.
- SIX SAG Ltd is not directly in the scope of FATCA. The area of share register management is not affected by FATCA. However, within the special share register area (management of shareholder custody accounts), it is necessary to carry out an identification process under FATCA for all depositors. It is not necessary to withhold US-taxes as no US-related payments have been made.
- SIX x-clear Ltd is identified as not being directly affected by FATCA. As a clearing house and central counterparty (CCP), SIX x-clear does not perform any FATCA-relevant activities.
- SIX Terravis Ltd is a SIX company and from an organizational perspective, is part of SIX Securities Services. SIX Terravis is not affected by FATCA.
Next steps for SIX
FATCA requires that a Compliance Framework is established in the whole group. This was set up as part of the group project and is now being introduced within
SIX Securities Services and all other business areas. This Compliance Framework will also be implemented and functional as at 1 July 2014.
We will continually publish the latest information on the status of FATCA on our website.
Contact SIX Securities Services:
Senior Project Manager