Corporate taxation

Man in skyscraper looking out of a window.
Switzerland is actively involved in efforts to develop international standards for corporate taxation within the OECD. © Matt Blanchfield Pixabay

In the referendum of 19 May 2019 on the Federal Act of 28 September 2018 on Tax Reform and AHV Financing (TRAF), the Swiss electorate voted by a clear margin for a reform of corporate tax law. This resulted in the abolition of all internationally criticised tax regimes, a reform that demonstrates Switzerland's implementation of the mutual understanding on corporate tax with the EU reached on 14 October 2014. It also means that the EU regards Switzerland as a cooperative state in this area.

Switzerland and the EU reached a mutual understanding on corporate tax within the scope of a dialogue conducted since 2012 on certain Swiss corporate tax regimes. The document was signed on 14 October 2014 by then Federal Councillor Eveline Widmer-Schlumpf and representatives of all EU member states. This brought to an end a bilateral controversy that had led to friction and the threat of substantial countermeasures on the part of the EU since 2005.

The understanding contained no treaty obligations and was limited to a list of principles and mutual intentions. In the document, the Federal Council reaffirmed its intention to propose abolishing certain tax regimes, particularly the different treatment of domestic and foreign revenue (known as ring fencing). New tax measures should be in line with standards of the Organisation for Economic Cooperation and Development (OECD). In return, the EU member states confirmed their intention to lift any countermeasures against these regimes as soon as the regimes in question had been abolished. A referendum opposing the first bill, Corporate tax reform III, was called and, on 12 February 2017, rejected by the Swiss electorate. The Federal Council then quickly submitted a new bill to Parliament, which was adopted by the electorate on 20 May 2019 with a majority of over 66%.

At the end of 2017, Switzerland was placed on Annex II of the EU's list of non-cooperative states in the field of taxation together with a group of other states in the process of adapting their legal bases. On 17 October 2019, Switzerland was removed from the list following its adoption of the TRAF and is now regarded as a cooperative state in this area.

Switzerland remains actively involved in efforts to develop international standards for corporate taxation within the OECD. This particularly concerns the new base erosion and profit shifting (BEPS) standard, which is recognised both by Switzerland and by the EU.


On 13 February 2007, the European Commission informed Switzerland about its unilateral decision that a number of cantonal corporate taxation regimes were in violation of the 1972 free trade agreement between Switzerland and the European Community. Switzerland has always considered the decision to be unfounded.

In June 2010, the EU put forward a proposal to Switzerland to conduct talks on the EU's code of conduct on business taxation, an EU internal policy instrument. The code does not apply to Switzerland as it is not a member of the EU.

However, Switzerland agreed to hold talks with the EU on contentious issues regarding corporate taxation. According to the EU, corporate tax practices in certain cantons were discriminatory because the revenues generated abroad were sometimes taxed differently from those generated in Switzerland (ring fencing).

Exploratory talks were then conducted with the EU in order to define the conditions for a dialogue. After consulting the parliamentary committees and cantons, the Federal Council adopted the corresponding mandate at the beginning of July 2012. The subsequent talks led to the mutual understanding of 14 October 2014.