EU removes Switzerland from its watch list

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In May 2019, voters approved the Federal Act on Tax Reform and AHV Financing (TRAF) with over 66% of votes in favour. With this law, Switzerland will abolish tax regimes no longer compatible with international standards as of 1 January 2020. The law introduces internationally accepted tax relief measures such as a patent box, thereby ensuring that Switzerland remains an attractive business location.

Since December 2017, Switzerland has been included on an EU list of third countries that had committed themselves to complying with international tax standards but had not yet achieved full implementation of the rules – the so-called grey list. As early as October 2014, Switzerland and the 28 EU member states signed a mutual understanding on corporate taxation, which provided for the abolition of specified tax regimes by Switzerland. In return, the EU member states reaffirmed their intention to repeal any countermeasures taken once these regimes had been abolished. The approval of the TRAF means that Switzerland is honouring the commitment it entered into with the agreement signed in 2014.

The economics and finance ministers of the EU member states acknowledged this progress and decided at their meeting on 10 October 2019 to remove Switzerland from their tax list.