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Switzerland Remains Defiant Over Tax System

by Ulrika Lomas, Tax-News.com, Brussels

06 December 2006


Members of the Swiss government have reiterated their determination not to give an inch to the European Union regarding the country's tax system.

According to the European Commission, the Swiss tax system is "incompatible" with the 1972 free trade agreement between Switzerland and the EU because it distorts trade within the bloc.

The EC takes issue with laws that allow local cantonal governments considerable freedom to set their own levels of taxation in a bid to attract international holding companies and high-net-worth individuals to relocate in Switzerland.

However, speaking earlier this week, Michael Ambuhl, a senior official of the Swiss Foreign Ministry, repeated the government's long-held view that the Swiss tax system has no bearing on the trade agreement with the EU.

"Our position is absolutely clear," he stated, according to Swiss Radio, continuing: "The cantonal taxes do not constitute a subsidy – indirect or direct – to the exchange of goods, and as such do not affect the free-trade agreement."

Ambuhl's statement follows closely in the wake of comments made by Swiss Foreign Minister Micheline Calmy-Rey in a Sunday newspaper interview, where she stated that there is "absolutely no room for negotiation," regarding Swiss tax laws, highlighting a growing impasse between Berne and Brussels on the issue.


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