Legal and political developments in Switzerland

Having recalled the ‘difficult matters’ that we discussed in our course, it is time to take a look at some recent developments on these issues. What has happened in the past months in these fields, both legally and politically?

  • With respect to the issue of corporate taxation, we have noted in Week 1 that, in 2014, the European Union (EU) and Switzerland signed a Memorandum of Understanding formally declaring an end to the EU–Swiss dispute on corporate taxation. This statement concerns the dispute as such, which is now deemed to have come to an end. Note that the EU and Switzerland never reached the point where they agreed on whether or not there was indeed an infringement of the Free Trade Agreement. Rather, Switzerland agreed to change its rules in view of changed Organisation for Economic Co-operation and Development (OECD) standards.

In 2014, the Swiss corporate tax rules had yet to be reformed. This kind of process takes time. In June 2015, the Swiss Federal Finance Department announced: ‘Third series of corporate tax reforms ready for parliamentary deliberation’. In June 2016, the Federal Parliament agreed on the revision. However, the launching of a popular referendum has already been announced against the new rules.

  • Turning to the issue of Banking Secrecy, we heard, also in Week 1, that the new rules in the renamed Agreement on the automatic exchange of financial account information should lead to a first exchange of information in 2018. Signed in 2015 and since ratified by the parties, the agreement will enter into force on 1 January 2017.

Regarding the initiative to save banking secrecy within Switzerland, the Federal Parliament has been discussing a counter proposal prepared by its economic committee (Wirtschaftskommission Nationalrat).

  • With respect to the vote of 9 February 2014 on curbing migration, we heard that the EU stopped informal talks with Switzerland on this issue in view of the advisory referendum to be held in the UK on 23 June 2016 about continued EU Membership. The UK voting population voted in favour of leaving the UK. However, the UK Government has not yet started the formal withdrawal procedure under Art. 50 TEU. It remains unclear what will be its future relationship with the EU and what rules will apply with respect to the movement of persons. In this situation, the EU–Swiss talks remained on hold.

In parallel to these developments the Swiss Federal Government took internal steps in order to implement the result of the vote. In March, the Federal Council presented a draft law to this effect, meant for the situation where no agreement with the EU can be found. The draft was then sent to the relevant Commission of the Federal Parliament. In April 2016, this Commission decided that the Parliament would deliberate on the draft in the autumn session of 2016.

  • Regarding the institutional issues the Swiss Federal Minister of Foreign Affairs stated in spring 2016, after a visit in Brussels, that he was confident that an agreement on a new institutional framework was close. However, at that time certain fundamental issues were still unresolved, among them notably the substantive reach of the role of the Court of Justice of the European Union in a revised dispute settlement mechanism. Would the Court interpret all provisions of the relevant agreements or only those derived from EU law? In summer 2016, these issues remained unresolved.

Finally, the Swiss Federal Parliament decided in summer 2016 that request by the Swiss Federal Government of 1992 for talks on potential Swiss membership in the then European Communities should be withdrawn. With a letter dated 27 July 2016, the Federal Council informed the President of the Council of the European Union accordingly. The Federal Administration published the letter (which is written in French) without any further comment.

Further reading

Read the information provided by the Swiss Federal Administration on the revision of the corporate tax rules

See how the Federal Administration published the letter of the Federal Council informing the EU about the withdrawal of the 1992 request by Switzerland for membership talks without any further comment: Swiss Federal Administration Press Release of 27 July 2016 Withdrawal of Switzerland’s membership application for the EU

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This article is from the free online course:

Switzerland in Europe: Money, Migration and Other Difficult Matters

University of Basel