I am working an interesting client. they have significant holdings in Switzerland and the reporting documents that i received show negative interest. Are you familiar with this - conceptually i understand but not sure if there is a T1 impact
thanks for any input
Negative interest EXPENSE = interest REVENUE
Negative interest REVENUE = interest EXPENSE
Unless there is some special reason to the contrary, interest revenue is taxable, and interest expense may be deductible depending on the source (i.e. interest paid on money borrowed to earn income).
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thank you for your reply
It is under section that says Bank Charges and Negative Interest - which has management fees, transaction fees etc. - so an expense?
Based on what you’re saying, it is not clear. If I couldn’t figure it out from examining the documentation, I would contact the issuer, or get the client to contact them, and ask specifically, “What is this? Income or expense?”
While most of us have only experienced negative “real rates” of interest for the last several years (meaning interest rates lower than the inflation rate), some countries in Europe, including Switzerland, actually moved to negative “nominal rates” of interest. This meant that instead of paying you interest on your cash deposits the banks would charge you interest (essentially a bank charge) or a storage fee for having money on deposit with them.
For instance Credit Suisse would apply a negative 0.75% rate on cash balances above 2 million Swiss francs… effectively charging their clients for storing money in their bank.
… I suppose it doesn’t come as a big surprise that Credit Suisse completely collapsed last month. 
If a client of mine had routinely reported and paid tax on their Swiss bank accounts over the years then I would likely not hesitate to deduct negative interest as a carrying charge in 2022. The client’s intent was not to pay interest, presumably they still have an expectation of receiving interest as the rates rise.
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Thank you. I am working with UBS for a client and i agree with your comments. I have included it as part of fees. That is how they presented it as well.
Very interesting topic.
i appreciate your insight.
Ironically I believe it was UBS that bought the failed Credit Suisse a few weeks ago. 