Yahoo is shifting its European tax base from Switzerland to Ireland

Internet search giant Yahoo! has denied it is shifting its main European base from Switzerland to Ireland for tax reasons, as Swiss authorities come under pressure to tighten the country's corporate tax regime.

According to a Reuters investigation, Yahoo has started to sign its advertisers up to contracts with its Dublin-based arm since November. Its premium services users will also be moved to customers of Yahoo EMEA in Ireland and away from its Swiss business.

"As we have stated in the past, the structure of our business is driven by business needs and we believe it is in the best interest of our users to have Yahoo EMEA provide all services for all users in the region," said a spokeswoman for Yahoo.

"There are a number of factors which influence such business decisions from our perspective. Ireland has an extensive data centre infrastructure that helps us serve our EMEA users in the most efficient way.

"In respect of Ireland in particular, Dublin is already the European home to many of the world's leading global technology brands and has been a good home for Yahoo for over a decade."

She added: "Yahoo pays all taxes required and complies with tax laws in all countries where we operate. We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law."

The European Union (EU) is unhappy with Switzerland's corporate tax incentives. In particular it orders its own member states not to discriminate between domestic and foreign firms.

Switzerland, which is not in the EU, taxes profits made outside the country at a rate below half that of money made inside the small state.

The EU is Switzerland's biggest trading partner and has suggested it would punish the country by limiting its access to the single market unless is abolishes this tax advantage.

This poses a risk to firms using Switzerland as a hub for their businesses because of its favourable tax regime.

Some are looking to countries such as Ireland, with its low and simple corporate tax system, as an alternative within Europe.