Wednesday, February 14, 2007

Switzerland: the EU pressure is mounting

Just a small note following my previous post on the Switzerland-EU relations, to mention that the European Commission has finally decided to go ahead with the case against certain favorable company tax regimes in Swiss Cantons, which are considered by the EU as a form of State aid incompatible with the 1972 Agreement between the EU and Switzerland.

Now it is a question of time to see if all EU member states agree on the "tactic" to apply in negotiations with Switzerland to put an end on tax measures, which the EU consider are resulting in a distortion of competition.

Although the 1972 agreement apparently allows the EU to take retaliatory measures, the press release indicates in its final paragraph a willingness to find a negotiated settlement with the Swiss authorities. Eventhough, note that to substantiate the decision taken against Switzerland the press release even evokes past actions against State aid taken for example against Austria in 1993 (back then EFTA country) on the basis of a corresponding provision. These cases basically involved the withdrawal of tariff concessions (retaliatory measure) but ended up being litigated in the ECJ. Let’s see the next chapters of this cat and mouse soap opera

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