For some time, Switzerland has been under pressure from the European Union that wants Switzerland to the negotiating table. The EU believes that the Swiss tax system is too gentle and therefore competitive in a distorting way for Europe.
Liberal tax system
For the Swiss people, it is a key issue to keep a liberal tax system and preserve the tax autonomy. They do not want to weaken the conditions for businesses and hence the Swiss competitiveness.
The Swiss politicians will not negotiate, let alone talk about a Swiss tax adjustment. Despite political pressure from the EU, the Swiss people stand firm.
Disagreement on tax agreement
The EU believes that Switzerland does not comply with a free trade agreement from 1972. The Swiss people believe that their cantons have autonomy and therefore self-determination over their taxes, which are apparently too low for the EU. Switzerland interprets the agreement so that it covers only trade in goods and not taxes on businesses and individuals.
Free tax competition in Switzerland
Basically, EU is against free tax competition whereas Switzerland is for it. Switzerland claims that they will have to be tax attractive in order to appeal to individuals and companies. All in all, this is seen as a compensation for the country’s geographical location in the centre of Europe, its lack of deep sea harbours and raw materials.
The tax dispute between Switzerland and the EU is therefore a hot potato and battle lines have drawn up not least in connection with the softening of banking secrecy.