The Swiss Federal Tax Administration published Communication-023-E-2025-f on 18 March 2025, addressing the tax treatment of constituent entities qualifying as permanent establishments under the GloBE rules and the Swiss Minimum Tax Ordinance.
The communication clarifies that while permanent establishments are treated as separate constituent entities for minimum tax purposes, they do not have legal personality under Swiss law. As a result, the tax liability and procedural responsibilities fall on the foreign parent entity rather than the permanent establishment itself.
Additionally, the foreign parent entity is jointly liable for the supplementary tax, and a foreign debtor with an establishment in Switzerland can be sued for the debts of that establishment. Despite these distinctions, the core principles of the GloBE rules, including jurisdictional blending, profit and tax allocation, and the location of entities and permanent establishments, remain unchanged and still apply.
Switzerland is gradually adopting the global minimum tax. From financial years beginning on or after 1 January 2024, constituent entities of multinational groups in scope will be subject to the Swiss top-up tax (QDMTT). In addition, the Federal Council decided in August 2024 that some entities, depending on their group structure, will also be subject to a Swiss top-up tax under the Income Inclusion Rule (IIR) starting from financial years on or after 1 January 2025.
