Merz sees end in Swiss-EU tax dispute

A dispute between Switzerland and the European Union over low corporate tax rates in cantons should be resolved in 2010, the finance minister has said.

Hans-Rudolf Merz said the EU continued to have problems with the Swiss system, but he expected the issue should be “brushed under the carpet next year”. It had been due to be resolved in the autumn.

Merz made the remarks on the sidelines of the annual summit of finance ministers of the EU and the European Free Trade Association (EFTA) in Brussels on Tuesday. He held informal discussions on various issues including cantons’ corporate tax breaks during the event.

Merz noted that Switzerland had made progress in reducing debt incurred under the economic crisis, the focal point of the Brussels summit.

The EU is concerned over foreign-owned holding companies flocking to Switzerland to take advantage of low corporate tax rates. It has stated in the past that tax privileges granted by some Swiss cantons to foreign companies are incompatible with a 1972 free trade agreement between Switzerland and the rest of Europe.

Switzerland has repeatedly refused to negotiate with the EU over the issue. The government says that corporate taxes are a cantonal issue and are not covered by the trade agreement.

swissinfo.ch and agencies