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CMS Expert Guide to Mastering OECD's Pillar Two in Switzerland

Key stages in the introduction of global minimum taxation

Table of contents
  1. Has there been a formal indication of the intention to implement Pillar Two/GloBE rules?
  2.  What is the implementation status of Pillar Two/GloBE rules?
  3.  Have your tax authorities published guidelines commenting on Pillar Two/GloBE rules?
  4.  When will the Income Inclusion Rule (IIR) come into force?
  5.  When will the Undertaxed Payments Rule (UTPR) come into force? 
  6.  Is there any intention to implement a Qualifying Domestic Minimum Top-Up Tax (QDMTT)? If so, when?
  7. Further comments
Switzerland
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1.Has there been a formal indication of the intention to implement Pillar Two/GloBE rules?

Yes.

2. What is the implementation status of Pillar Two/GloBE rules?

16 December 2022: the Swiss Parliament approved the constitutional amendment to implement the OECD Pillar Two GloBE Model Rules into Swiss domestic law (“MindStV Ordinance”).

24 May 2023: at its meeting, the Federal Council opened the second consultation on the MindStV Ordinance, which in particular specifies the tax procedure in Switzerland. The consultation will last until 14 September 2023.

18 June 2023: Swiss citizens and cantons accepted the constitutional amendment by public vote. As a result, the government plans to temporarily introduce the Minimum Taxation regime by means of the MindStV Ordinance for simultaneous entry into force with the EU, which would make the law effective from 1 January 2024. The model regulations developed by the OECD/G20 are to be adopted by means of a reference. This shall ensure the international compatibility of the Swiss regulations.

3. Have your tax authorities published guidelines commenting on Pillar Two/GloBE rules?

Not yet.

4. When will the Income Inclusion Rule (IIR) come into force?

2024.

5. When will the Undertaxed Payments Rule (UTPR) come into force? 

2024.

6. Is there any intention to implement a Qualifying Domestic Minimum Top-Up Tax (QDMTT)? If so, when?

2024.

7. Further comments

To levy the new supplementary tax, the Federal Council is planning a so-called one-stop store: the economically most significant unit of a corporate group is to pay the tax for all units in Switzerland in its canton. The canton would then transfer its share of the supplementary tax revenue to the Federal Government and to those cantons that are home to other business units of the same corporate group. This concept was developed in cooperation with representatives of cantonal tax administrations in order to minimise the administrative burden.

The supplementary tax is to be levied by the cantons as part of a mixed assessment procedure analogous to income tax. This means that the tax authorities will determine the tax and set it by means of a ruling. However, the taxable business entities are obliged to cooperate by submitting a self-declaration.

The declaration and the procedure are to be carried out electronically on a portal. The Federal Tax Administration (FTA) and the cantons concerned will have access to this portal. The appeal procedure provides that complaints regarding the assessment are to be submitted directly to the Federal Administrative Court.