Switzerland is to change its tax system in order to please EU

01.07.2014

The agreement on the business taxation was concluded between Switzerland and European Union today. The agreement shall end negotiations and discussions which have continued for almost 10 years.

Text of the agreement, that was introduced today, allows to finish the two-sided dispute, that resulted in the threats of countermeasures for Switzerland from EU.

Federal Council of Switzerland confirmed its decision to refuse some of tax regimes, in particular, those ones that create differences in treatment of domestic and outside profits. ( so called "ring-fencing" regime). Introduced instead of those new regimes will be based on the international standards.

In its turn, European Union said about its readiness to cut countermeasures for Switzerland as soon as the country will cancel mentioned above regimes.

Source: https://www.news.admin.ch/message/index.html?lang=en&msg-id=53614

Expert’s opinion

All the Swiss attempts to stay neutral failed. On the one hand, USA basically deprived Swiss banks of all that was sacred, i.e. bank secrecy. And on the other hand the comrades from EU pushed too.

Not being the EU Member Switzerland tried to stay sole and follow EU regulations at minimum for a long time. But being surrounded by the EU Member States it is very hard to hold off. Also, having the access to EU single market and getting economic profits from it, it is complicated not to follow requirements of the Union.

But there is one question. Recently there negotiations were held in Switzerland at the canton level on the reform in the corporate taxation, according to which the substantial cutting of the tax rates was planned. (http://hbcomp.ru/about/news_and_mailings/news_jurisdictions/4022/). New tax measures will be based on the international standard, but tax rates in the EU Member States are different. Is it possible for new tax regime to be even worse than the one that is in place now? And shall Switzerland refuse the planned reform in cantons?

Anna Shevchenko ( Lawyer, Honest&Bright)