International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, July 30, 2014

FACTA in Swiss Finance Transactions

20130122171255.pngIn a recent report, Lukas Wyss and Maurus Winzap discuss the impact of the new FACTA rules on Swiss debt finace transactions.  They state that:

"In the context of debt financing transactions, the risk is that:

  • payments from an US tax obligor (i.e. an obligor that is either (i) formed or organised under the laws of the US or (ii) engaged in a trade or business in the US (or, if a treaty applies, has a per- manent establishment in the US) (a US Tax Obligor) are subject to a 30% with- holding tax in the event that either the agent or any lender is a Non-Participating FFI;
  • if an obligor itself is an FFI and either the agent or any lender under the transaction is a Non-Participating FFI, a 30% withholding tax applies on at least a portion of all payments made under the transaction that are treated as «passthru payments» (however, it should be noted that passthru payment withholding has been delayed until the later of 2017 or 6 months after regulations are finalised; IGAs currently reserve on passthru payments); and 
  • payments among finance parties might become subject to FATCA Deductions in the event that one finance party is a US Tax Obligor and the other finance party is a Non-Participating FFI. Documentation should therefore address these risks."

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