Switzerland again rejected negotiations with the European Union over certain cantonal tax regimes for holding companies, management companies and joint enterprises which the European Commission considers to be in breach of state aid rules under the 1972 Free Trade Agreement. Representatives from Switzerland and the Commission met yesterday in Berne within the scope of the dialogue agreed at the technical level to discuss the EU's assessment of certain cantonal company tax arrangements. In February, the commission informed Switzerland of its unilateral decision that these arrangements at the cantonal and communal tax level distort competition and impair trade in a manner not compatible with the Free Trade Agreement. In May, the European Council instructed the EU Commission to begin negotiations with Switzerland, but these were rejected. The Swiss delegation, led by Alexander Karrer, head of the Monetary Affairs and International Finance Division in the Federal Department of Finance, stated that in the case of holding companies, revenues from Swiss sources are taxed in the same way as those from foreign sources and both domestic and foreign-controlled companies are entitled to benefits. The Swiss delegation restated the position of the Federal Council that the tax provisions criticised by the EU do not fall within the scope of the Free Trade Agreement and, because Switzerland is not an EU member or part of the Single European Market, neither the competition regulations of the EC Treaty nor the code of conduct agreed between the EU member states on company taxation are applicable. Switzerland again rejected negotiations with the EU but agreed to continue the dialogue at the technical level. A further meeting was scheduled for early 2008. The EU delegation was led by Matthias Brinkmann, head of Unit for the EEA and EFTA states in the European Commission's Directorate-General for External Relations.