In an official response, the Swiss government has repudiated allegations made by the European Commission earlier this week that Switzerland’...

In an official response, the Swiss government has repudiated allegations made by the European Commission earlier this week that Switzerland’s company tax regime infringes the Switzerland/EEC free trade agreement. The Swiss dismissed the allegations as "unfounded".

The Swiss government reiterated its belief that no contractual regulations exist between Switzerland and the European Union on the harmonisation of company taxation and so it is not possible for there to be an infringement of any agreement.

"This applies in particular to the Free Trade Agreement," Berne stated, arguing that this agreement only covers trade in certain goods, and does not provide a sufficient basis for judging company taxation, in particular concerning distortion of competition.

Switzerland is not part of the Single European Market, so the code of conduct on company taxation agreed amongst EU member states are not applicable to Switzerland said the Swiss government.

Switzerland also argued that the cantonal measures on company taxation under criticism do not discriminate against domestic companies and do not constitute special treatment of foreign companies, because they are not selective but are open to all commercial players - regardless of nationality or manufacturing or economic sector.

"Locational competition is a fact. Tax burdens vary considerably even in the EU and company locational moves occur between the EU states. Like all states, Switzerland endeavours to be an attractive business location with advantageous conditions. Company taxation is an important factor in this regard, but is not the only reason by a long chalk for Switzerland being attractive," said the Swiss government.

Besides tax, the government attributed its success at attracting international companies to its modern infrastructure, flexible, multilingual and well-qualified workforce, strong research and developmental capacity, industrial peace, and well-developed network of double taxation agreements.

Earlier this week the European Commission had told the Swiss government that it considers certain tax schemes applied by the cantons to certain types of company (holding companies, management companies and joint enterprises) to be state aid.

The commission said these tax schemes at the cantonal and communal level distort competition and impair trade in a manner not compatible with the 1972 Free Trade Agreement.