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If fund tax reporting is not your core business but high need; what’s your approach?


Why funds are working with external partners to enhance quality in fund tax reporting and devote their time to strategic topics.

Download the EY Swiss Investor Tax Reporting brochure


In brief

  • Private investors and fund providers are subject to various tax reporting requirements.
  • While the need to deliver accurate, timely fund tax reporting is high, the process is time-consuming and costly.
  • External solutions offer a host of potential benefits and provide a convenient way for large asset managers, boutiques and startups to access resources in a cost-efficient way.

Foreign collective investment schemes authorized by the Swiss Financial Market Supervisory Authority (FINMA) are legally required to carry out the respective fund tax reporting in line with the circulars of the Swiss Federal Tax administration (SFTA). Additionally, they must report the taxable income to the SFTA.

The fund tax reporting process is complex and time-consuming, requiring considerable internal resources. Working with an external provider of fund tax reporting offers various benefits.

Swiss fund tax reporting is essential for private Swiss-domiciled investors who must fulfill their annual tax compliance obligations. It plays a crucial role in distinguishing between taxable capital income and non-taxable capital gains, as Swiss tax law does not impose taxes on capital gains from privately held assets for tax-resident individuals.

Fund providers face significant challenges when it comes to the complex and time-consuming process of fund tax reporting. This task demands substantial internal resources, making it particularly burdensome for smaller boutique setups and startups, who often struggle to meet the demand in a cost-efficient manner. However, partnering with EY as an external service provider of fund tax reporting offers several benefits, which we will briefly explore in this article.

Compliance

Tax regulations and reporting requirements can be complex and subject to frequent change. An external service provider specializing in fund tax reporting, such as EY, delivers a breadth of experience and know-how that is simply not feasible in a smaller in-house setup. External providers have established systems in place to monitor changes in tax regulations across relevant jurisdictions, allowing them to promptly alert their clients. Renowned providers like EY actively engage in dialogue with local tax authorities and tax associations, contributing to the shaping of regulatory practices in this field.

Enhance efficiency and quality

Outsourcing fund tax reporting to a dedicated provider can significantly enhance efficiency, accuracy, and overall quality. The process of accurate and compliant fund tax reporting requires handling large amounts of data. Proper processes and the right technology can streamline these tasks, by enabling fund providers and their clients to meet deadlines and submit the required information on time, thus reducing the risk of non-compliance.

Access technology and innovation

Advances in technology, including robotic process automation, can accelerate and streamline workflows – but can be costly to implement and should also only be employed with the necessary expertise. EY invests in tech-enabled reporting tools at a scale that would not be realistic for individual providers. By accessing these technologies through managed services agreements, for example, fund providers get the same benefits of automated processes, comprehensive reporting capabilities and real-time tax insights – without the upfront spend.

Enable scalability and flexibility

As funds grow or launch new investment vehicles, the complexity and volume of tax reporting increases. EY offers scalability and flexibility to handle these changing needs. We accommodate the expansion of fund operations, adapt to evolving reporting requirements, and provide tailored solutions to meet specific fund objectives.

Grow the business

For many distributors, including funds in their portfolios that comply with local tax regulations is a requirement. By partnering with a global service provider such as EY, startups can instantly widen their pool of potential clients and grow their businesses more efficiently.

Secure cost effectiveness

Maintaining an in-house team solely dedicated to fund tax reporting often proves to be financially impractical. Outsourcing this function allows fund providers to reduce expenses associated with hiring, training, and retaining specialized staff. Moreover, external providers often offer flexible pricing models, enabling funds to scale their tax reporting services as needed, which results in cost savings.
 

Focus on core competencies

Fund providers should prioritize activities such as investment management, client relationship buildings and business growth, as these are the fields where they can add significant value. By delegating time-consuming tasks like fund tax reporting, fund providers can concentrate on their core competencies and allocate internal resources more strategically, ultimately maximizing their overall effectiveness.
 

Elevate risk management

Errors or omissions in tax reporting can have severe consequences, including reputational damage, regulatory repercussions and financial penalties. Engaging an external fund tax reporting specialist can help mitigate these risks, as they employ robust processes and internal controls to ensure accuracy, compliance, and proper risk management, safeguarding fund providers from potential pitfalls.
 

To explore how EY can assist you in leveraging these benefits and more as your trusted provider of tax fund reporting solutions, we invite you to download our brochure.


EY Swiss Investor Tax Reporting

Discover EY's innovative solutions and expertise in Swiss Fund Tax Reporting. Download our brochure and explore how we can assist you in navigating the complex world of tax reporting.

Sits by the table with laptops. Young business people in formal clothes working in the office.

Summary

Collaborating with an external fund tax reporting provider ensures operational excellence, bridging of gaps, and enhanced quality. Technology-driven efficiencies and expert oversight foster business growth and compliance.

Acknowledgements

We kindly thank Sleman Saliba, Ilir Marku and Alex Alvarez for their valuable contribution to this article.

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