Swiss covered bonds' taxation constraints

Author: | Published: 11 Jul 2016

Benedikt Maurenbrecher, Dieter Grünblatt and Stefan Kramer of Homburger discuss the Swiss taxation system’s impact on the issuance of covered bonds at an international level

According to the European Covered Bond Council's definition, covered bonds are secured debt instruments which meet the following criteria: (i) The issuer or the guarantor of the debt instrument is a prudentially regulated credit institute (i.e., a bank); (ii) the debt instruments are secured by a cover pool of mortgage loans (property as collateral) or public-sector debt to which investors have a preferential claim in the event of default; and (iii) the bank has a continuing obligation to provide a sufficient amount of assets to the cover pool in order to be able to satisfy the claims of the covered bond investors, and compliance with such obligation is subject to supervision by a public authority or independent third party. In Switzerland, there are two...