EU Threatens Tiny Switzerland Over Low Taxes

[PLYMCO_PILGRIM]

So wait the EU is admitting that low taxes attracts business which would create more jobs for citizens of the country the businesses go to?

That's the impression the OP wants to create, but it is FALSE. Switzerland DOES NOT have lower corporate tax rates than the EU countries, it just has chaotic ones set independently by each canton.

If you want to learn a lesson from something factual, it's important to, you know, get the facts CORRECT.

You're giving the EU too much credit. They're not that smart. They're actually angry with Switzerland and are badgering them to raise their Taxes.

This, too, is FALSE. The EU wants Switzerland to STANDARDIZE its taxes -- not to raise them. Swiss corporate taxes are already higher in some cantons than those in any EU country.

What business is it of the EU that cantons have different tax rates?

It isn't their business in my opinion, thats Switzerland's business alone.

 

[paulitician]

Switzerland is not a member of the EU. Therefore it is perfectly reasonable for them to tell the EU to Fuck Off and mind their own business. Who needs em anyway?

 

[BluePhantom]

Taxation is part of it. The cost of labor comes into play also.... Can you hear that Unions?

Not according to the liberals. According to them that has nothing to do with it either.

 

[Euroconservativ]

By the way, the swiss socialist party (strong in french-speaking cantons) dislikes tax competition and supports a minimum federal income tax rate of 22% for those earning more than 250000 francs. Some months ago the swiss voted against the idea in a referendum


"Zug long was a poor farming region, but in 1947 its leaders began to trim tax rates in an effort to attract companies and the well-heeled. In Switzerland, two-thirds of total taxes, including individual and corporate income taxes, are levied by the cantons, not the central government. The cantons also wield other powers that enable them compete for business, such as the authority to make residency and building permits easy to get.

Businesses moved in, many establishing regional headquarters. Over the past decade, the number of companies with operations of some sort in the canton jumped to 30,000 from 19,000. The number of jobs in Zug rose 20% in six years, driven by the economic boom and foreign companies’ efforts to minimize their taxes. At a time when the unemployment rate in the European Union (to which Switzerland doesn’t belong) is 9.4%, Zug’s is 1.9%"


Two thirds of total taxes levied by cantons/states. That's the only practical application of the "small government" ideas. Low federal income taxes (10% or less), decentralization, tax competition between local administrations.

In my opinion, US Politics are dominated by two major contradictions: 1) Conservative: small government and $1 trillion defense budget. 2) Liberal: open borders/easy citizenship and expanded government welfare programs.

 

[JWBooth]

Switzerland is a sovereign state and is not a member of the EU and should tell the EU to go piss up a rope. Just as it should have told the US to do the same when it was leaned upon to violate it's banking laws.

 

[Dragon]

Here's another thing about Switzerland: the wages are very, very high.

Want the world's best wages? Move to Switzerland | Reuters

They have their own cantankerous ways of doing things and always have. But the Swiss are just as socialistic as the rest of Europe, and more so than many.

 

[bripat9643]

Here's another thing about Switzerland: the wages are very, very high.

Want the world's best wages? Move to Switzerland | Reuters

They have their own cantankerous ways of doing things and always have. But the Swiss are just as socialistic as the rest of Europe, and more so than many.

The taxes are low and the wages are high, but you think that proves socialism and high taxes work?

 

[paulitician]

I'm still missing why Switzerland should listen to anything the EU demands. The EU is completely collapsing while Switzerland is doing just fine. Maybe the EU should just shut up and start listening to Switzerland instead? Looks like they know what they're doing while the EU is clearly lost. The EU has no right to make demands or threaten anyone. They should actually be begging Switzerland for help.

 

[Euroconservativ]

Population: 7.8 million
Unemployment rate: 3%
Youth unemployment rate: 7%
Activity rate: 80%
Government debt: 38% of GDP (budget surplus in 2011)
Exports: 200 billion euros (trade surplus)
Top federal personal income tax rate: 11.5%
Top federal corporate tax rate: 8.5%
VAT: 8% (Brussels does not allow any EU member state to have a rate lower than 15%)

-------------------------------


ZUG, Switzerland—Low taxes have long given Switzerland a strong hand in the battle to lure the operations of big multinational companies. Now, an intramural war is on in which individual Swiss states are competing harder to attract business.

Switzerland's states, known as cantons, are offering rock-bottom tax rates meant to tempt multinationals into establishing regional headquarters or other operations in their jurisdictions. In doing so, other cantons are trying to take business away from Zug, the Swiss canton that has mastered the game of attracting business to such a high degree that it is beginning to run out of space.Since the 1960s, Zug has set the pace in persuading multinationals to set up shop, drawing names such as Johnson & Johnson, Burger King Holdings Inc. and Siemens AG.

As Zug now runs short on housing and office space, small cantons nearby are getting in on the act. "Zug made an extremely good decision years ago to have a competitive tax code," says Georges Meyer, a tax partner at PricewaterhouseCoopers in Zurich. "Now you see a trend of neighboring cantons trying to attract business too."

Switzerland as a whole is battling with countries such as Ireland, the Netherlands, the U.K. and Germany for a share of multinationals' business. While Switzerland's top research universities, efficient public sector and strong intellectual-property protection are attractive, its low tax rates are a huge draw.

Switzerland's federal corporate tax rate is just 8.5%. When average cantonal and municipal taxes are included, the average corporate tax rate in Switzerland is 21.2%, compared to about 30% for Germany and 25.5% for the Netherlands, according to KPMG.

But in Switzerland, the cantons—which enjoy far more autonomy than do U.S. states—are the main drivers in luring multinationals. Two-thirds of total taxes are levied by the cantons, which also have wide autonomy on social-security contributions, business permits, residency requirements and construction rules. As a result, the cantons take the lead in pitching for companies to come to Switzerland.

"Switzerland is such a popular choice for multinationals that it was high on our list from the start," says Rich Riley, senior vice president for Europe at Yahoo Inc., which established its European headquarters in the canton of Vaud in late 2008. "We looked at multiple countries and multiple cantons within Switzerland."

The battle for multinational business comes as companies have become savvier about relocating more activities to regional headquarters to lower their tax burdens. According to consultancy McKinsey & Co., Switzerland attracted more than 180 regional headquarters of large foreign companies between 1998 and 2008. In just the last several years, Kraft Foods Inc., Yahoo and Google Inc. have established European headquarters in Switzerland, and more than 150 U.S. companies now have a presence here.

In 2007, Zug attracted 1,600 new businesses. Last year, as many companies put relocation plans on hold due to cost-cutting, it drew only about half that, but Zug officials say they are satisfied, given the economic slump.

But Zug is a victim of its own success. International schools here are scrambling to expand to accommodate requests for new students, and housing and office space are in short supply.

"If someone says to me, I want to be here within a year with 500 people and I want space near the railway station, I can't do that," admits Hans Marti, head of Zug's economic promotion board.

Now other cantons are snapping at Zug's heels. Schaffhausen, a canton north of Zurich near the German border, halved its corporate tax to 16% in 2008 and is emphasizing the ready availability of private homes and the 30-minute journey to Zurich Airport.

Several years ago, consumer-goods giant Unilever set up a regional supply-chain division in Schaffhausen because it could no longer get the office space it needed in Zug, where it had previously housed part of that operation. Zug also lost out to Schaffhausen in attracting operations of Wal-Mart Stores Inc. because of space, says Mr. Marti.

A Wal-Mart spokesman declined to confirm that the company has decided to set up shop in Schaffhaussen yet, though the canton's promotional materials tout the retail giant's arrival there.

The cantons of Lucerne and Obwalden have also cut their tax rates. In 2006, Obwalden, south of Zug, cut its lowest corporate rate to 12.7%, undercutting Zug to introduce the lowest corporate rate in Switzerland. Obwalden built an industrial park last year, increased its marketing budget and improved the highway link to the Zurich airport. It has attracted 450 small companies for each of the last three years, netting 2,000 new jobs.

"We offer much lower real-estate prices than in Zug," says Knut Hackbarth, head of the economic promotion board for Obwalden. "That's what you get in exchange for being a quarter hour further away from Zurich than Zug."

Geneva, long a destination for big companies, has also been trying to draw some hedge funds with personal income-tax rates that are low compared to some other big cities outside Switzerland. London-based hedge-fund managers have been grumbling about the U.K.'s increase in the income-tax rate to 50% this year from 40% for those who earn more than £150,000 ($240,000) a year. By contrast, Geneva charges high-income earners about 35%.

While most hedge funds have opted to stay in London, at least two high-profile funds are opening offices in Geneva. BlueCrest Capital Management LLP, which has $17 billion under management, is moving about 50 of its 350 employees to Geneva, according to a person familiar with the matter. Brevan Howard Asset Management LLP, one of Europe's largest hedge funds, with $27 billion in assets, has secured office space in Geneva and plans to begin operating there this year. At least two of Brevan Howard's roughly 50 London-based partners are considering the move, according to a person familiar with the matter.

 

[paulitician]

The EU is in no position to threaten anyone. They're a miserable failure. So my advice to Switzerland would be to simply tell the EU to FUCK OFF!!

 

[GoneBezerk]

I did a day trip from Germany into Switzerland once without my passport since I thought they were part of the EU. There were no border guards going into Switzerland but when I drove back into Germany I got stopped asking for my passport....thanks for my US Gov credentials saving my butt.