Switzerland Amends CO2 Tax Provision

by Ulrika Lomas, Tax-News.com, Brussels

17 May 2010

It has recently emerged that, from 2011, the Swiss Federal Council plans to redistribute the product of its carbon dioxide (CO2) tax to both individuals and businesses the same year in which the tax is levied. As a result of this decision, the Federal Council amended the order pertaining to the tax during its meeting of May 12.

In accordance with the provisions laid out in the current order, revenue derived from the CO2 tax levied on heating oil and natural gas (including interest) is redistributed to individuals and companies two years after the tax is imposed. However, in September 2009, in a bid to improve the economic climate in Switzerland, both the Federal Council and parliament elected to redistribute the product of the tax much earlier for the years 2008, 2009 and 2010.

The Swiss Federal Administration maintains that an undesirable gap would have emerged in terms of economic policy if the original provisions had been reapplied from 2011. Consequently, to enable redistribution to continue without interruption, the Federal Council decided that from 2011, the product of the CO2 tax would be redistributed the same year.

The Federal Administration has made known, however, that revenue derived from the tax levied on volatile organic compounds (COV) will continue to be redistributed two years following imposition, as is currently the case.

By virtue of the new legislation, from 2011, more than CHF500m (EUR356m), derived from the CO2 and COV tax will be redistributed to individuals and businesses in Switzerland.

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