Switzerland, EU Discuss Tax
Thursday, March 22, 2012
Swiss President Eveline Widmer-Schlumpf and Federal Councillor Burkhalter have
recently met with top European Union representatives within the scope of a working
visit in Brussels, with the discussions focussing on current developments in bilateral
relations and in particular on strengthening cooperation in the area of taxation.
The topic of taxation was discussed by President Widmer-Schlumpf, the President
of the European Commission, José Manuel Barroso, the President of the
European Council, Herman Van Rompuy, and the EU Commissioner for Taxation, Algirdas
emeta. At the meeting, Switzerland and the EU agreed to intensify cooperation
relating to tax issues and to establish a formal dialogue in the area of company
The system of company taxation in Switzerland has been a long-running source of friction
between Berne and Brussels, with the EU claiming that certain cantonal company
tax arrangements are incompatible with the 1972 Swiss-EU Free Trade Agreement
- a notion that the Swiss government firmly rejects. A series of talks
between Commission officials and the Swiss federal government fizzled out in
2007/2008, with both sides effectively agreeing to disagree on the main points
at issue. Nonetheless, the breakdown in talks merely reinforced Switzerland's
view that it has no case to answer with regards the compatibility of its tax
system with EU law, with the Federal Department of Finance stating that: "Switzerland
rejects negotiations with the EU".
The Swiss government also declared that it was prepared to examine the possibility
of a framework agreement between itself and the EU on withholding tax on savings
income within the context of new bilateral arrangements between Switzerland
and certain EU member states, including Germany and the UK, aimed at 'regularizing'
undeclared Swiss bank accounts.
The European Commission argues that the tax deals undermine the objective of
the Savings Tax Directive, a mechanism which allows member states to tax certain
investments held by residents in other member states and certain third countries,
including Switzerland. Opposed to the anonymity provision, the Commission is also
continuing to strive for an automatic exchange of tax information.