Corporate tax: EU bears down on Switzerland

Following our article about a month ago looking at European moves to challenge Swiss corporate tax policies, we are encouraged to see the normally well informed Europolitics, in an article headlined Corporate taxation: Union bares teeth, reporting that the European Union is moving forwards smartly with its plans.

We have already showed that the EU is likely to all but destroy Switzerland's immoral and useless, loophole-riddled Rubik deals with Germany and the UK in the area of personal taxation. Now this, in the field of corporate taxation:

In a report adopted on 19 December, the 27 member states make veiled threats of retaliation measures against Berne if the «dialogue» they wish to engage in on application of a code of conduct should fail to produce «satisfactory» results by next summer. . . . a clash looks inevitable, unless Switzerland makes concessions and acts quickly.

Note that the European Union has a lot of leverage over countries like Switzerland who aren't member states: it can deny access to its markets, and so on. The report that Europolitics describes is one that looks at the Code of Conduct on taxation that has been applied since 1998, and which it says has already obliged the 27 member states to dismantle around 100 tax schemes that encouraged company relocations. It's not clear if this number includes schemes such as this in Jersey (which is outside the European Union but has a special relationship with it.)

For more background on the Swiss-EU corporate tax dispute, see Thomas Cottier's article on p8 of our October 2010 edition of Tax Justice Focus, which also notes that not everyone in Switzerland is happy about what is happening at home, pointing out that "the Swiss public at large generally dislike tax privileges for the rich and wealthy."

Despite the turmoil in Europe, it is likely that the 27 member states will continue to fight to protect their sovereignty from these attacks mounted from the Alpine foothills of Geneva and Zurich.