• Anne Marie Anselmi, Partner |
  • Martina Schwendener, Senior Manager |

For lease accounting, there are no adjustments to be considered in the GloBE calculations as the recapture rules don’t apply. However, leasing costs are included in the calculation of the SBIE and thus lower the top-up tax amount. Acquisitions or leasing contracts may therefore lead to different overall cash-tax positions. 


On 18 June 2023, the Swiss people voted in favor of implementing the global minimum tax framework (BEPS Pillar Two) as agreed by the OECD/G20 Inclusive Framework. 

In this blog series our experts are highlighting practical application issues Swiss MNE groups should consider so as to manage and optimize future top-up tax consequences. 

In this blog we will look at the rules with respect to leasing under IFRS 16 and their implications for the substance-based income exclusion (“SBIE”).

What do the GloBE Model Rules say?

The Globe Rules don’t specifically require any adjustments to the GloBE income or Adjusted Covered Taxes due to leases. 

With respect to potential long-term deferred tax liabilities arising under IFRS 16 lease accounting, the recapture rules in accordance with Art. 4.4.5 (a) also don’t apply as leasing positions are explicitly mentioned in the commentary to be subject to the recapture exception accrual. Such deferred tax positions may in particular arise where, for statutory purposes, a lease expense is recognized in the income statement instead of a right-of-use asset or a lease liability.

However, for the computation of the SBIE, the leasing costs (right-of-use asset) can be taken into account (Art. 5.3.4 (c)) at the level of the lessee and thus lowering the excess profit and serving as a basis for the top-up tax calculation, provided that such leasing costs relate to tangible assets located in the jurisdiction.

How is this relevant for Swiss MNE Groups?

As for all required adjustments in the GloBE calculations, it needs to be ensured that the data is available at the right level, can be easily identified and hence reflected in the calculation appropriately. 

This means that any right-of-use assets included in the Financial Accounting Net Income or Loss and located in the jurisdiction should be clearly identifiable based on the chart of accounts/reporting packages.

Further, when evaluating whether to enter into a leasing contract, rather than purchasing an asset (e.g. a building), the company should also consider the differences in the SBIE calculation if IFRS 16 (lease accounting) applies instead of IAS 16 (purchase of PP&E). Contrary to IFRS 16, under IAS 16 the recognition of the acquired assets (for IFRS as well as for statutory purposes) will result in depreciation over a predefined period of time.

Generally speaking, if the rent obligation according to the leasing contract (IFRS 16) exceeds the depreciation on the acquired asset (IAS 16), the current tax expense will be lower for the leasing contract. However, depending on the recognized asset being subject to SBIE, top-up tax consequences might be different. This is why it’s necessary to analyze on a case-by-case basis whether an acquisition or lease will result in a material cash-tax saving. 

Key questions and next steps

Obtaining insights on guidance and interpretation as well as understanding best practice approaches and technology solutions are key. Swiss MNE groups would therefore do well to take the following into account:

  • Are right-of-use assets appropriately identifiable based on the current chart of accounts?
  • How can we appropriately reflect the data elements in the GloBE calculations relevant for the (potential) top-up tax determination including the SBIE calculation
  • Have we assessed whether an acquisition rather than a lease contract could be an opportunity to lower the combined cash-tax position (current and top-up tax)

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