The Base Erosion and Profit Shifting (BEPS) Project addressing the Tax Challenges arising from the Digitalisation of the Economy – resulted in a two-pillar approach:
- Pillar One aligns taxing rights more closely with local market engagement and departs from using physical presence as a nexus.
- Pillar Two is an agreement on a global minimum level of taxation of 15%.
Pillar Two is relevant for groups that have reported annual revenues of EUR 750 million or more in their consolidated financial statements in at least two of the four preceding fiscal years. If your group does not meet the threshold, you should still check – based on the ownership structure – that the group does not belong to a larger group with an obligation to consolidate (e.g. a family office, foundation, etc.).
Work on both Pillar One and Pillar Two is under way, but Pillar Two is more advanced. Originally expected for 2023, the global minimum tax of Pillar Two is unlikely to be in place that early. Although some questions remain open, international developments indicate that Pillar Two is on track for implementation at the start of 2024 in many countries – including Switzerland.