Entrepreneurs interested in opening a company in Switzerland can opt for various business structures, one of them being a SPV (Special Purpose Vehicle). A SPV is a type of subsidiary company which has an asset or liability structure and a legal status that secures its obligations even if the parent company goes bankrupt. A SPV can also function as a subsidiary corporation designed to serve for swaps and other types of credit sensitive derivative instruments. Usually, SPVs are used to isolate financial risk.
The securitization market in Switzerland constantly increasing, as well as the number of transactions made in this field. In Switzerland, a SPV company is registered for other categories of assets as well, such as loans and receivables.
The Swiss securitization market
The market for securitization is still developing in Switzerland, which makes it difficult to have reliable data regarding the number of transactions. Nevertheless, the volume and number of public transactions placed and listed has been massively increasing in the credit card and lease sectors in the recent years.
In addition, there are a large number of privately placed transactions in various asset categories, including auto leases and loans, trade receivables, commodities receivables and similar assets categories.
Many Swiss securitization transactions are refined through conduit platforms instead of using direct issuance of debt instruments to the private market. Banks in particular pursue synthetic securitization transactions in various asset categories.
Swiss securitization transactions are generally based on trade receivables, credit card receivables, commodity warehouse receipts, auto leases and loans, commercial real estate loans, residential mortgage loans and loans to small and medium-sized businesses.
Swiss legislation regarding SPVs
Securitization has developed in Switzerland without having a specific supporting legislation and there is currently no regulating authority for securitization transactions. However, the general legal framework is relevant just like in the case of any other financial transactions, for example the Swiss Code of Obligations, especially regarding the formation of a SPV company and the transfer of receivables and assets as such and regulations regarding general capital markets.
No specific rules are applied to asset back securities. The SIX Swiss Exchange applies the same rules as for bonds issuance in general, but the issuing SPVs benefit from more relaxed standards applied during the approval process.
As of January 1, 2016, Swiss authorities have imposed The Financial Market Infrastructure Act, a regulation meant to establish a more standardized business environment, in line with the European regulations in order.
Therefore, if you decide to open a SPV in Switzerland, it is important to comply with the Swiss Code of Obligations and with regulations applicable to capital markets. The company will be monitored by the SIX Swiss Exchange and by the Swiss Financial Market Supervisory Authority.
In addition, there are no public disclosure requirements related to the issuance in the framework of securitization transactions. When securities are issued to the public capital market in Switzerland, it is necessary to consider the general prospectus and the listing requirements, depending on the investor base and where the securities will be marketed.
Issuing SPVs which are listed on the SIX Swiss Exchange Market have to comply with the general Swiss capital market regulations. The regulations include ad-hoc publicity as part of the listing rules of the SIX Swiss Exchange.
Business structures for Swiss SPVs
In Switzerland, a SPV can take the legal form of a Swiss GmbH (limited liability company) or the form of a Swiss AG (joint stock corporation). Each type of business structure has certain requirements, but the incorporation process is relatively simple and fast, depending on how much it takes to prepare the necessary paperwork.
Taxation of Swiss SPVs
Transfer taxes are not paid in the case of transfer of receivables through a SPV company. The transfer is not imposed with a VAT tax in general, but interest payments performed by a SPV are imposed with a withholding tax rate of 35%.
Swiss SPVs are liable for capital gains taxation; however local authorities can deduct the expenses of a special purpose company, which means that the tax rate can vary from one Swiss canton to another.
If you decide to open a SPV company in Switzerland, our experts in company formation in Switzerland can help you with the legal requirements, the necessary paperwork and with other issues related to the process of registering a company in Switzerland.