Switzerland, EU finalize agreement on Corporate Tax Reform 

Switzerland and member states of the European Union (EU) have signed a joint statement that reaffirms Switzerland’s commitment to abolish contested corporation tax regimes and EU member states’ pledge to lift countermeasures.

The agreement was signed on October 14, 2014, on the sidelines of a joint meeting of economics and finance ministers from the EU and European Free Trade Area (EFTA). It was initialed in July.

The statement explains that the Swiss Federal Council intends to take steps to remove five tax regimes. It will abolish: the cantonal administrative company status, the cantonal mixed company status, the cantonal holding company status, Circular Number 8 of the Federal Tax Administration on principal structures, and the current practice of the Federal Tax Administration regarding finance branches.

The Council has clarified that any possible replacement measures will need to be in line with generally accepted international standards. It will adopt draft legislation and open the compulsory consultation process with the cantons, political parties, and other interested groups as soon as possible.

A consultation has already begun on plans for abolishing the cantonal tax statuses currently available to holding, domiciliary, and mixed companies. By using a practice known as “ring fencing,” the Swiss cantons can tax multinationals’ foreign profits at a lower rate than their domestic earnings. The consultation will run until January 31, 2015.

According to the statement, the parties “agree on the positive effects of fair tax competition and the need to ensure competitiveness at international level, whilst noting that unfair tax competition may lead to harmful effects.”

Source: taxnews- Switzerland, EU Finalize Agreement On Corporate Tax Reform

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