Eternity Law International — News — Investment fund in Switzerland

Investment fund in Switzerland

Published:
August 5, 2024

Investment funds abroad may be particularly attractive to those who already have experience investing internationally. By pooling capital, you can achieve more profitable investments and take your business to a new level. The financial sector plays a central role in the Swiss economy. Thanks to its strong economy, political neutrality and banking secrecy, the country is a relatively safe place to invest. Switzerland is also a world leader in international asset management, with 25% of the global market. The financial industry here is very diverse. However, investors should consider the possible risks when registering an investment fund Switzerland.

Our company has been providing document preparation services and full support during the registration of investment funds in Switzerland and other jurisdictions for many years. Our lawyers are ready to provide you with comprehensive assistance in obtaining an investment fund license in any jurisdiction. We have extensive experience and know how to correctly fill out all documents and communicate with regulatory authorities.

Switzerland fund setup

Switzerland occupies one of the leading places among European countries in terms of business conditions in the field of asset management. In 2019, the World Economic Forum named Switzerland the fifth most competitive economy in the world, reflecting a healthy institutional environment and high levels of technological and scientific research. Switzerland investment regulations are provided by FINMA. Other regulators are the Financial Markets Authority and the SFAMA.

  1. FINMA is responsible for the establishment and supervision of management firms, asset managers and cross-border collective investment funds, as well as their retailers and administrators. In addition, FINMA approves their products.
  2. SFAMA represents the interests of collective investment funds and managers in the country.

Having decided to implement starting a fund in Switzerland, it is important to understand that this is an alternative to structures such as trusts. The main goal of creating an investment fund is not only to preserve assets, but also to increase them. Switzerland, as a global financial center, ensures high reliability of deposits and their protection from third parties. This jurisdiction is considered an important financial center representing both Swiss and foreign collective investment schemes. Foreign investors interested in setting up an investment fund in Switzerland should note that the allocation of foreign funds is divided into retail and qualified.

Regulatory requirements for Switzerland fund registration

For those planning to create and subsequently implement Switzerland fund management, it is important to consider that regulation depends on:

  • country of origin of the fund;
  • type of investors (qualified and unqualified).

Funds can be treated as CIS schemes and classified into open-ended or closed-end types, depending on the investment structure. To apply for registration with FINMA, you must meet the following requirements:

  • have an impeccable reputation;
  • ensure proper management of the fund;
  • be professionals in fund management.

Switzerland fund administration

In this country, both local and foreign investment funds can register as open or closed structures. Open-end funds allow investors to sell their units/shares back into the fund, allowing them to convert their investment into cash at any time.

Regulation of such firms occurs in accordance with the current legislation of the jurisdiction. On January 1, 2020, two new laws came into force:

  • on financial services (FinSA);
  • on financial institutions (FinIA).

FinSA is responsible for the provision of money-related services and the offering of financial instruments, establishing rules of conduct for providers of these services. FinIA defines the licensing and organizational requirements for non-bank financial institutions registered in the country.

Closed investment funds in Switzerland

Foreign investors can also create closed investment funds, which are governed by the same laws as open ones. However, in closed-end funds, investors cannot sell their shares back into the fund, and such funds cannot offer their shares to the general public.

Our specialists will help you open a company of any type in Switzerland or other jurisdictions. We also have ready-made options, in particular, we can offer an alternative investment fund for sale in the Czech Republic. Contact us today, and very soon you will become the owner of a new successful investment fund in this country.

Registration process for Swiss investment funds

Swiss collective investment schemes (CIS) must be registered with FINMA before starting their activities.

  1. The applicant’s managers and responsible persons must have an impeccable reputation, guarantees of proper management and appropriate professional qualifications.
  2. Qualified shareholders who directly or indirectly own 10% or more of the capital or voting rights or to have significant influence, must have an impeccable reputation and must not use their influence to the detriment of sound management.
  3. Domestic rules must ensure compliance with the obligations stipulated by Swiss regulations.
  4. Sufficient financial guarantees are required.
  5. All additional requirements specified in CISA must be met.

To establish an investment fund in Switzerland, the application must be examined by a Swiss audit firm recognized by the Federal Audit Oversight Authority (FAOA). FINMA approval requires the submission of fund documentation (e.g. collective investment agreement, Articles of Association, etc.), including a key investor information document (KIID).

Licensing of funds

Domestic and overseas open-end retail funds are required to register with regulatory authorities. To do this, it is important to provide a lot of documentation, which differs by type of fund. Common documents include:

  • prospectus;
  • KIID;
  • collective investment agreements for treaty funds, Articles of Association and investment regulations or partnership agreement for CIS organized under company laws;
  • any other documents required for approval under applicable foreign and Swiss laws for the CIS.

If the investment fund operates in the local financial market, you should open an account in an official bank of the country and keep accounting records. Swiss foundations are required to publish various information in relevant media.

Switzerland investment fund taxation

Tax fees vary depending on the type of registration chosen. For example, funds established as SICAV, LP or contractual funds are not subject to income tax or capital tax. Profit distributions or accumulated profits from deemed annual distributions of FCP and SICAV are subject to 35% withholding tax. In the case of a SICAF, taxation follows corporate tax rules, which means that the fund will be taxed as a commercial company, including corporation tax and capital tax.

Thus, in terms of benefits of Switzerland investment funds, it could be said that this jurisdiction is a well-known market for registering investment funds in Europe due to its effective legislative framework and many legal rules governing investment funds. The main legislation for funds is the Collective Investment Scheme Act (CISA). Registered funds in Switzerland can use the Swiss courts, which are considered to be among the most reputable in the world.

Our company provides professional services for registering investment funds in Switzerland, accompanying clients at every stage of the process. We ensure full compliance with FINMA requirements, including preparation of all necessary documents, obtaining licenses and compliance with regulatory obligations. We will also assist you in establishing an investment fund in SVG, Cyprus, Estonia, Portugal and other countries. Our experts have in-depth knowledge of Swiss law and extensive experience in setting up both open-end and closed-end funds, ensuring the safety and efficiency of your investment operations.

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