Switzerland-Liechtenstein Sign Green Tax Treaty
Monday, March 8, 2010
The Swiss Federal Council has recently approved both the message and draft federal
decree pertaining to the treaty on environmental taxes between Switzerland and
Under the terms of the new treaty, signed on January 29, Liechtenstein
will apply the same environmental taxes as its Swiss neighbour.
In 1920, Switzerland and Liechtenstein created a common economic and monetary
area. According to the Customs Treaty of 1923, Swiss customs legislation, and
indeed other federal legislation connected to the customs union, are also applicable
In a bid to protect the environment, Switzerland introduced in 1998 environmental
taxes designed to encourage environmentally-friendly behaviour through financial
and tax incentives for materials and products, notably organic compounds, “extra
light” heating oil, as well as diesel. In 2008, Switzerland then elected
to introduce a tax levied on carbon dioxide emissions resulting from the use
of fossil fuels.
Although these environmental taxes are not related to customs tax, given the
close economic relations between Switzerland and Liechtenstein, and in order
to avoid unfair competition, both the Liechtenstein and Swiss government agreed
that the taxes should be similarly applied in Liechtenstein.
The new Treaty provides the basis for the application of these environmental
taxes, as a separate convention. Up until now, this was covered, as a temporary
measure, under the Customs Treaty.
In application provisionally as from February 1, 2010, the new Treaty has yet
to be approved by parliament, and is subject to an optional referendum on international