On 22 December 2023, the Swiss Federal Council published a release in which it confirmed enforcing the Pillar 2 global minimum tax in Switzerland from 1 January 2024.

As previously reported, the Federal Council will gradually introduce the global minimum tax, which involves an initial ordinance to regulate the minimum tax temporarily in Switzerland. This will be achieved by introducing a “supplementary tax” to ensure a minimum level of taxation for corporate groups with a consolidated global revenue surpassing EUR 750 million. A federal law will eventually replace the ordinance.

On 22 December 2023, the Federal Council decided to begin levying the supplementary tax in Switzerland from 1 January 2024. This will prevent erosion of the tax base in favour of other countries. The Federal Council will decide on other elements of the OECD/G20 regulatory framework later.

On 18 June 2023, most people and the cantons voted in favor of a special tax regime for large corporate groups. The Federal Council was thus mandated to temporarily implement the OECD/G20 minimum tax rate by means of an ordinance. The transitional provision in the Federal Constitution provides for a supplementary tax in this regard.

Within six years of the ordinance entering into force, the Federal Council must submit a bill to Parliament that replaces the Minimum Taxation Ordinance. The minimum tax rate will be implemented as a national supplementary tax. With this supplementary tax, Switzerland will ensure a minimum domestic tax rate of 15% for large multinational enterprises whose turnover exceeds EUR 750 million. This will prevent the erosion of the Swiss tax base in favor of other countries.

The transitional provision in the Constitution contains key requirements for the ordinance. With regard to these rules, the Federal Council applied the following guiding principles to the implementation of the minimum tax rate in Switzerland:

• International compatibility: The Swiss regulations should be accepted internationally to provide Swiss-based businesses with the greatest possible legal certainty. For this purpose, the ordinance must align with the OECD/G20 regulations.
• Preserve Switzerland’s economic interests: Where explicitly permitted or provided for, in the OECD/G20 regulations, room for maneuver and voting rights should be used in the interests of the Swiss location.
• Avoid administrative hurdles: The administrative burden for businesses and cantonal tax authorities should be kept as low as possible.

It also observed that the prerequisites for putting the supplementary tax into force in Switzerland with effect from 1 January 2024 had been met, in particular now that the vast majority of EU states and other Western industrialized nations such as the United Kingdom plus South Korea have opted to implement the regulations as of the same date.

By contrast, the Federal Council has decided to initially refrain from applying the international supplementary tax rules IIR and UTPR. In this regard, it will continue to monitor international developments and decide about implementation at a later date, should this prove necessary to preserve Swiss interests.