Following the conclusion of an agreement on the automatic exchange of information in 2015 and the 2019 corporate tax reform,important international standards in the tax area were implemented between Switzerland and the EU, which had a positive effect on the tax climate. The agreement on the automatic exchange of information between Switzerland and the EU entered into force on January 1, 2017, in accordance with the OECD standards. On January 1, 2020, the Federal Law on Tax Reform and the Financing of the AHV (RFFA), came into force, putting an end to controversial tax regimes. Switzerland thus implements the international tax standards.
Automatic exchange of information
Since 2005, Switzerland has paid more than three billion euros to member countries under the agreement on the taxation of savings income with the EU. As of 2017, this agreement has been replaced by the agreement on the automatic exchange of information in tax matters concluded in 2015. The latter covers not only interest, but also dividends and other capital income and does not only concern persons with bank accounts, but also persons controlling foundations and trusts. This is an implementation of the new OECD global standard. The agreement on the automatic exchange of information was designed to be reciprocal: the member states therefore have the same responsibilities as Switzerland with regard to the exchange of information on bank accounts. In September 2018, Switzerland exchanged bank data with EU member states for the first time.
Switzerland is currently advocating that the EU does not go beyond the internationally agreed standards when implementing new OECD standards (namely on reporting obligations of internet platforms and regarding crypto assets). Uniform implementation worldwide reduces costs not only for the economy, but also for the tax authorities. It ensures the proper functioning of the global exchange of information.
In recent years, numerous tax regimes have been abolished worldwide that no longer met international standards. This was also an issue in the relationship with the EU. Switzerland and the EU agreed in October 2014 on the abolition of 5 such tax regimes. On the other hand, the EU has renounced possible countermeasures. After the failure of the third corporate tax reform (RIE III) in the popular vote of September 12, 2017, the Swiss government quickly presented a new project aiming to replace the controversial tax regimes by measures in line with international standards. The tax project was accepted by the Swiss people in the vote of May 19, 2019, and entered into force on January 1, 2020.
Switzerland implements the international OECD standards adopted at the end of 2014 as part of the BEPS project ("Base Erosion and Profit Shifting"). This reform aims to avoid illegal tax evasion as well as profit shifting by multinational companies. The new standard also helps to ensure that all financial and economic centers are on an equal footing in terms of tax bases.
In 2021, some 137 states also agreed on the outline of a solution to the tax challenges of the digitalized economy. This solution includes a partial redistribution of tax rights to states with large markets (pillar 1) and a global minimum tax for multinationals (pillar 2). In this context, Switzerland is committed to comprehensive and consensual measures. At the end of 2022, the EU adopted the directive for the implementation of the minimum tax. The rules are to apply from 2024. Switzerland also has this timetable. On 18 June 2023, the Swiss electorate approved the bill to implement the minimum tax. Switzerland is thus one of the first countries worldwide to implement the minimum tax.
The EU not only implements international standards, but also launches its own tax projects. These can also have a significant impact on Switzerland. In 2021, for example, the EU has agreed on a country-specific public consultation for multinational companies. European subsidiaries of Swiss companies are also affected by this provision. Another example of a measure that indirectly affects Switzerland is the project to prevent the abuse of so-called "letterbox companies" for tax purposes. The planned measures are intended to combat letterbox companies in the EU, but also worldwide.
The EU is closely monitoring the implementation of international standards by third countries such as Switzerland, in particular with regard to transparency, fair taxation and the application of BEPS measures. Failure to do so could result in Switzerland being classified as a "non-cooperative tax jurisdiction". Since December 2017, Switzerland was on the EU watch list. After the acceptance of the corporate tax reform, the EU decided on October 10, 2019 to remove Switzerland from this list. By the way, EU member states do not appear on the tax list if they do not implement the standards. However, the Commission can initiate infringement proceedings against them.
The anti-fraud agreement of 2004 improves cooperation between Switzerland, the EU and its member states in the fight against smuggling and other offences in the area of indirect taxes (e.g. customs duties, value added tax and consumption taxes). The agreement has not yet entered into force, as Ireland has not yet ratified it, but it has been provisionally applied by most member states since 2009.