Tax policy – in line with international standards

Swiss five franc coins
Swiss five franc coins © FDFA, Presence Switzerland

After the conclusion of the agreement on the automatic exchange of information (AEOI) in 2015 and the company taxation reform, the relations between Switzerland and the EU with regard to taxation are more relaxed and back to normal. The AEOI agreement between Switzerland and the EU has entered into force as of 1st of January 2017. This is in line with OECD standard. In the referendum of 19 May 2019, Swiss voters adopted the reform of company taxation that will abolish the controversial tax regimes. With this, Switzerland implements the international standards.

Automatic exchange of information

Since 2005 Switzerland has already transferred over 3 billion euro to the Member States under the provisions of the agreement on the taxation of savings. In 2017, this agreement was replaced by the agreement on automatic exchange of information on tax matters, concluded in 2015. The latter is not only covering interests, but also dividends and other capital income and it doesn’t only affect persons with bank accounts, but also persons controlling foundations and trusts. Thereby, the new global OECD standard will be applied.  The AEI agreement is based on reciprocity, i.e. when exchanging account information, EU Member States have the same obligations to Switzerland as Switzerland has to the EU Member States. In September 2018, Switzerland automatically exchanged account data with EU Member States for the first time.

Corporate taxation

In October 2014, Switzerland and the EU agreed that Switzerland would abolish several tax regimes which are considered by the EU as distortive to competition.  The EU on the other hand was willing to waive counter-measures. After the failure of the referendum vote on the corporate tax reform III on 12 February 2017, the Swiss Government has presented as soon as possible a new project in order to abolish several tax regimes and introduce measures that are compliant with the international standards. This has been adopted by the Swiss voters on 19 May 2019. 

Switzerland implements the new international OEDC standard which was decided end of 2014 in the framework of the BEPS project (Base Erosion and Profit Shifting). Unjustified tax avoidance and profit shifting of multinational companies should be avoided by applying this standard. This standard also allows business locations to have the same conditions when it comes to tax bases.

The EU has also decided in 2015 and 2016 rules to implement OECD standards. The EU wants to consciously play a leading role and, in some instances, even go beyond the standards. By taxing foreign-controlled companies, this can lead to a discrimination of third countries; a point that Switzerland has several times raised and criticized in regards to the EU and its member states. The implementation of the new EU measures in the Member States will prove that this discrimination can be avoided.

However, other EU tax projects that could have significant effects on Switzerland are also being monitored closely. These include, for example, the planned financial transaction tax, the common consolidated corporate tax base (CCCTB), the revision of the value added tax and the taxation of the digital economy.

The EU monitors closely whether third countries like Switzerland comply with the international tax standards. This particularly concerns standards regarding transparency, fair taxation and implementation of the Anti-Base Erosion and Profit Shifting (BEPS) measures.  In case of non-compliance Switzerland might be listed as "non-cooperative tax jurisdiction". The EU has included Switzerland on its so-called watch list in December 2017. After the approval of the corporate taxation reform, the EU decided however to remove Switzerland on 10 October 2019 from their tax list.        

Anti-fraud agreement

The anti-fraud agreement of 2014 improves the collaboration between Switzerland and the EU and its Member States with regard to combatting smuggling as well as other crimes related to indirect taxation ( for example custom duties, value added taxes and excise duties). It has not come into force as Ireland hasn’t ratified yet, but it is being provisionally applied by most of the Member States since 2009.