Baker & McKenzie Holds Briefing on New Developments in Swiss Insurance Laws

A discussion on legal, tax and cross-border aspects

Zurich, Switzerland, May 15, 2012 - Within the framework of the regular business briefings organized by the Wealth Management Team of Baker & McKenzie in Zurich, Joachim Frick, Robert Desax and Lyubomir Georgiev spoke on the developments in the area of Swiss insurance laws on regulatory, legal and tax aspects affecting the various market players. After many years of discussion, a more or less final draft of the new insurance contract law has been published. International treaties and a new regulatory framework will likewise affect Swiss insurance carriers, brokers, intermediaries and banks engaged in insurance.

“The new law provides more consumer protection, including mandatory provisions and rights of policyholders for policy documents and detailed information. In a clear Weissgeld-Strategy environment, transparency is critical as well as the regulatory and political stability of the jurisdiction and the reputation of the insurer," said Mr. Frick.

Mr. Desax raised questions regarding the estate and donation tax initiative.  For example, in respect of one of the pension pillars (3b) although the estate may already be reduced by investment in certain insurance products benefitting third parties, the heirs still may have to bear the tax on something they might never benefit from.  Another aspect to keep in mind is the withholding tax agreements that Switzerland has recently concluded with Germany, the UK and Austria.  Under those agreements a one-off payment based on capital for the past and withholding taxation for the future will apply to so-called insurance wrappers (Lebensversicherungsmantel).

Mr. Georgiev stressed that such withholding would not apply as long as the beneficial owner agrees for the Swiss intermediary to share information about the owner through the Swiss tax administration with the respective foreign tax authority. Mr. Georgiev also mentioned various products used in the wealth management industry.  Any of those products that have cash value would be caught under the rules of the Foreign Account Tax Compliance Act and thus withholding or reporting to the US tax authority.  Such issues related to due diligence and withholding would be among the key questions for the insurance industry in the near future.

For any questions about this press release, please contact:

Joachim Frick ( +41 44 384 231)
Marnin Michaels ( +41 44 384 1208)
Lyubomir Georgiev (   +41 44 384 1490)
Robert Desax ( +41 44 384 1325)