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Home > News Items > EU attacks "illegal" Swiss tax rules
EU attacks "illegal" Swiss tax rulesA growing number of companies have moved their headquarters or distribution centres out of the EU to Switzerland to take advantage of favourable tax rules which enable Swiss cantons to exempt profits generated abroad from regional and local company taxes. The EU Commission, reflecting the frustration felt in a number of European capitals, has stated that such rules amount to illegal state aid and must be scrapped. It said that Switzerland's refusal to amend its rules violated a 1972 agreement not to provide incentives which distort competition, a claim the Swiss deny, and it has asked member states for a mandate to renegotiate the agreement. The 1972 agreement gives Swiss companies privileged access to EU markets in return for the Swiss government applying the majority of EU internal market rules. The Swiss government has, in turn, stated that it rejects the Commission's claims; that it will not allow Switzerland's attractions as a financial centre to be diminished and is minded to retain and improve this attractiveness. If no renegotiated settlement proves possible the result could be measures such as punitive tariffs on Swiss exports to the EU. February 2007
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