Tax system for EuroAirport Basel Mulhouse Freiburg: Federal Council approves agreement between Switzerland and France

At its meeting on 25 January 2017, the Federal Council approved the agreement between Switzerland and France on the tax system applicable to the EuroAirport Basel Mulhouse Freiburg. Switzerland is now ready to sign and implement the agreement as soon as the Council of the European Union has accepted the application for VAT exemption which France submitted in 2015, which is to allow Swiss value-added tax is to be levied in the Swiss area of EAP. The European Commission has recently submitted a proposal to France in this regard. The agreement will be made public as soon as it has been signed.

The Federal Council has also approved a protocol to be concluded between the Swiss Federal Office of Civil Aviation and France’s Directorate General for Civil Aviation, which details how the French Directorate General for Civil Aviation will be compensated for services provided in the Swiss area of the airport. This protocol to the agreement will be signed in the days to come.

2 November 2016 saw the successful conclusion of negotiations between France and Switzerland begun in early 2016 to seek an intergovernmental agreement on the tax system applying to the EuroAirport Basel Mulhouse. The agreement provides a legal framework for what was agreed in the joint declaration adopted by the then President of the Swiss Confederation, Johann N. Schneider-Ammann, and the President of the French Republic, François Hollande, in Colmar, France, on 23 January 2016.

The main points of the agreement are:
- Swiss value-added tax is to be levied in the Swiss area of EAP.
- France and Switzerland will split the receipts from corporation tax paid by EAP, with all stakeholders taking a share.
- The French Directorate General for Civil Aviation will be compensated for services provided in the Swiss area of EAP.
- Companies in the Swiss area will pay French income tax and Swiss capital tax but will not therefore be liable for the main local ancillary taxes levied in France, to which the Swiss tax is considered equivalent.

This agreement enables the establishment of a long-term legal regime for tax, ensuring that the airport and its businesses remain attractive, and promoting their development in line with Switzerland’s objectives. Under the new regime, the overall tax burden on businesses in the Swiss area will remain similar to what it is currently. The government of Basel-City, which was closely involved in the negotiation of the agreement, has reiterated its full support to the Federal Council for the implementation of the arrangements. The agreement will enter into force as soon as France has completed its internal approval procedures.

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