SW 7-9 Flashcards
Debt-Equity Swap: What is that?
- liabilities are transferred into equity
- economically: debt position is reduced and new equity is created
- legal perspective: debt-equity swap is a cap. increase with contribution in kind (offset)
- controversial before if legal: issue should be regulated with the new revision of the Swiss Code of Obligations
Non performing loans
FINMA Defintion (name all 5)
- 90 days unpaid interest
- 90 days overdue amortization
- 90 days credit overdraft
- breaking of financial covenants
- granting special conditions due to financial difficulties
What kind of taxes does exist in Switzerland? (4 levels)
- indirect vs. direct
1. Federal
2. State(Cantonal)
3. Commune (Gemeinde)
4. Church
Difference between genuine restructuring gains vs. not-genuine restructuring gains
Genuine restructuring gains:
- represent taxable income
Not-Genuine restructuring gains:
- are tax neutral
- tax deductible (future) losses may still be off-set
Tax on capital increase
- generally subject to Swiss Stamp Tax -> Capital Issue Tax
- tax rate: 1%
- Capital increase costs are deductible (including the tax itself)
- a tax relief may be granted
- no income tax applicable
What is an A-fonds-perdu-payment?
- payment goes directly into reserves
= third party who is givig the money, doesn’t receive anything (no shares, no certificates, etc.)
- a payment that is lost
A-fonds-perdu: tax
-> why is it relevant, who the payments do?
Possible payers:
- shareholder
- affiliated companies (angeschlossene Firmen)
- third parties
* *Shareholders and affiliated companies**:
not-genuine/restructuring gains
Third parties (unrelated):
genuine restructuring gain
A-fond-perdu: What is the triangle theory?
- in case of affiliated party’s payment (siehe Bild -> Tochterges. B zahlt etwas an Tochterges. A
- contribution which are not at arms-lenght
a) transaction is considered a concealed dividend from sister comp. to parent comp.
b) then considered to be a concealed capital injection from the shareholder to the company - > be sure to not run into this triangle issue!
A-fonds-perdu: What is the VAT (Value Added Tax)?
Payments from Third parties (not shareholders or affiliates -> here issue tax)
-> VAT: payments from third parties are considered as “donations” and are subject to input tax reductions
Capital reductions: tax
- Capital reductions are efforts by the shareholders and therefore treated as a grant
- issue tax payable
- tax relief possible (if you ask for it)
revaluation: tax
- are considered as a genuine restructuring gain
- > it will reduce future ability for taking tax deductions
subordination agreements: tax
- not a problem for Swiss tax purposes
- may be an issue for a German parent company issuing a subordination agreement with a Swiss company
- > German tax consequences to be considered (consult with German tax expert)
Debt-Equity Swap: tax
- transaction leads to new equity
- > issue tax
A-fonds-perdu-payments: What are the consequences for the grantor (the one giving the money)?
non deductible capital loss (= nicht abzugsfähiger Kapitalverlust)
Loan agreement: there are 2 types of contracts
- Loan agreemnents
- > timing bereits vorher vereinbart - contract on opening credit lime
- > Kontokorrent
What is a Pricing Grid?
- > the more risk a bank has with his client, the higher are the costs for the client (margin)
- > example (screenshot): the higher the debt factor = the higher the risk for the bank = the higher the interest rate
Security Assignment: Construct Principle
- pledger (Verpfänder) transfers to the pledgee (Pfandgläubiger) the mortgage notes for fiduary (treuhänderisches) title holding
- additional agreement on the use (Sicherungsvereinbarung)
