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EU Urges Switzerland To Secure Tax Reform's Passage

Tuesday, February 26, 2019

The European Council has called for the swift enactment of Switzerland's proposed corporate tax reform package.

The recommendation was one of a number of conclusions adopted by the Council regarding the EU's relations with the Swiss Confederation.

The Council said that it welcomes the passage by the Swiss Federal Assembly in September 2018 of "legislation replacing certain preferential tax regimes and practices that constitute harmful tax competition with a new set of internationally accepted measures."

The Federal Act on Tax Reform and AHV Financing (TRAF) will abolish the special arrangements for cantonal status companies under which such companies pay only a reduced profit tax or no tax at all. It will also introduce a mandatory patent box regime for all cantons, accompanied by additional deductions for research and development expenditure to be implemented on an optional basis. The taxation of dividends will also be reformed.

A public referendum on the TRAF will be held in Switzerland on May 19. The proposals replace a package of tax reforms rejected in a February 2017 referendum.

The European Council called for "a swift enactment of the reform."