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Switzerland

Partial elimination of stamp duty on securities dealingWenger Vieli Belser, Zurich

The Swiss legislator has partially eliminated the stamp duty on securities dealing. The new law, which will enter into force on January 1 2001, was enacted in light of the fact that the existing system has placed the Swiss financial marketplace at a considerable competitive disadvantage compared to foreign financial marketplaces, particularly due to developments in electronic trading. Institutional investors, above all, caused their portfolios to be administered by foreign banks or brokers.

The new law will exempt foreign institutional investors (foreign governments, foreign national banks, investment funds, social insurance institutions, pension funds, and life insurance companies) as well as Swiss investment funds from the stamp duty. The elimination of the stamp duty for foreign institutional investors will enhance the attractiveness of the Swiss financial marketplace. The stamp duty exemption for domestic investment funds is intended to prevent them from migrating abroad (mainly to Luxembourg). Domestic institutional investors, on the other hand, will now be deemed by law to be securities traders and will therefore be mandatorily subject to stamp duty.

Securities of Swiss companies traded on a foreign exchange (blue chips) will also be exempted from the stamp duty. This exemption is related to the creation of the virtual stock exchange virt-x in London at the beginning of 2001, an exchange formed through a joint venture between SWX Swiss Exchange and the London exchange tradepoint. This exemption will prevent the Swiss banks from suffering a disadvantage vis-à-vis the other members of virt-x.

These measures, which are generally viewed as an intermediate step towards a complete elimination of the stamp duty, will significantly improve the parameters of the Swiss financial marketplace.

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