The Swiss Federal Council, on June 20, announced that Switzerland will initial an agreement with the European Union Economic and Financial Affairs Council outlining principles and intentions concerning Switzerland’s business taxation regime.
The Federal Council said the agreement reaffirms Switzerland’s intention to propose abolishing Cantonal tax regimes that treat domestic and foreign revenue differently and its intention to create new tax measures in line with international tax standards. In return, EU member states have confirmed their intention to lift corresponding countermeasures when the Swiss tax regimes in question have been abolished.
The EU has long criticized Switzerland’s Cantonal tax legislation applicable to holding companies, domiciliary, and auxiliary companies for “ring fencing,” or granting lower tax rates to foreign source income as compared to Swiss source revenue.
Separately, EU Taxation Commissioner, Algirdas Šemeta, noted the agreement, stating that the EU’s two year dialogue with Switzerland on corporate taxation has formally been closed with successful results. Swiss press release, Statement of EU Taxation Commissioner Algirdas Šemeta.
