The European Union may consider taking measures if no progress is made in talks over the varying Swiss corporate taxation rates in its 26 cantons.
Switzerland has been holding exploratory talks with the EU for the past year following a request for it to fall in line with the principles of the EU Code of Conduct for Business Taxation.
So far, only the “parameters and criteria” for dialogue have been discussed. The EU sees its Code of Conduct as a way of identifying and eradicating “harmful tax practices”.
A group responsible for the Code of Conduct will look at alternative measures “if no satisfactory progress is made in this dialogue” within the next six months, according to a report presented by a group of experts to EU finance ministers ahead of their meeting on Wednesday. Such measures could include a “unilateral examination” of taxation practices.
According to the Swiss News Agency, diplomats of EU member states hinted that retaliation measures were possible if Switzerland did not step up the process.
In parallel with the EU talks, the Swiss government is working with a cantonal task force to develop a “non-discriminatory solution” and the cabinet is expected to decide on the following steps once this has been established.
In 2007, the EU Commission declared that some of Switzerland’s cantonal company tax practices were not compatible with the Free Trade Agreement and in 2010 it asked Switzerland whether it would be willing to following the principles of the Code of Conduct.
Switzerland maintains that it is not bound by the Code of Conduct rules as it is not a member of the EU.