EU blasts Switzerland over tax breaks

The European Union has lashed out at Swiss authorities for breaching
bilateral agreements and offering illegal state aid to companies that relocate
there for tax benefits, the

The EU has upped the
pressure on
to abolish the tax cuts it offers, as the Union’s irritation intensifies
that multinationals are locating their headquarters and distribution centres

Kraft Foods is one such company, having uprooted from Vienna and London in
favour of Zurich.

Switzerland has described the Commission’s agreement as ‘unfounded’, saying
that there are no contractual agreements between the Swiss and the EU, making
infringements impossible.

The EU is particularly upset over a law that allows Swiss cantons to exempt
profits generated abroad from regional and local company taxes. The EU claims
these tax breaks over a ‘formidable incentive’ for companies to relocate.

France presidential candidate
, meanwhile, has pressed for a European tax on ‘speculative
movements’ by financial groups such as hedge funds.

In an interview with Les
, Sarkozy said he wanted to ‘improve security in
financial capitalism’.

‘We did not create the euro to have capitalism without ethics or morals,’ he
said. ‘I am extremely worried about speculative movements. Who can tolerate a
hedge fund buying a company with debts, firing 25% of the staff and then
reimbursing them by selling it in pieces? Not me.’

Further reading:

Corporate pressure forces foreign dividend tax rethink

French finance minister admits taxpayers will be hit

One rate fits all for EU tax

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