Changes in the European Savings Tax Directive: FAQs on what has changed for the so called "Grandfathered Bonds".
Who decided that grandfathered bonds with a gross-up/early redemption clause would be continued past December 31, 2010?
- For Swiss paying agents, the Swiss Federal Tax Administration, based on a decision of the EU Commission in Brussels confirming that two EU member states (among these Luxembourg) will continue to apply the grandfathering provision for negotiable debt instruments beyond December 31, 2010. Under Article 16 Paragraph 1 of the Switzerland-EU Agreement on Taxation of Savings Income, this also allows Switzerland to continue grandfathering within certain parameters.
How have instruments with a gross-up clause been marked by SIX Financial Information, and what does the summary look like?
- With a "Y" in the VDF DOC EUD.VAI.EUB.4924-A. If there is no gross-up clause, the field remains empty.
- The summary remains unchanged. It will continue to show the "No tax" code.
What does the status of instruments that have lost their grandfathered status look like, and what does the summary look like?
- The "No longer applicable" code is set in VDF DOC EUD.VAI.EUB.4920.
- The field EUD.VAI.EUB.2801-B (correction date for grandfathered status) is set to Jan. 1, 2011.
- The summary is modified as follows: Security types 0, L, and V receive the code "In Scope – Tax" issuers with CH domicile "In Scope – CH no tax" securities of type 6 receive either "Unknown – CH tax" or "Unknown – CH no tax".
Has the seven-day advance notice period been applied to the switch?
- No, the grandfathered instruments and funds have been switched over on the effective date, January 1, 2011.
When has the new data been delivered, and has there been a full load?
- The data has been reorganized on December 31, 2010 before the third partial VDF delivery. The new data was delivered with the third partial VDF delivery. There hasn't been a full load; only the deltas have been delivered in each instance.