• Olivier Eichenberger, Director |

Following its proposal to amend the constitution, the Federal Council published the draft implementation ordinance for consultation. We provide an update on the current status of minimum taxation in Switzerland and ask: who’s affected, what happens next and what should your company do now?


Switzerland has committed to implementing the global minimum taxation (Pillar 2) agreed by the OECD/G20 Inclusive Framework by amending the constitution.

The process includes temporary arrangements with basic parameters that empower the government to release the respective (temporary) implementation ordinances as of January 2024. Such ordinances shall be replaced by a formal amendment of the law in a subsequent step.

The OECD had initially planned to implement the Income Inclusion Rule in 2023 and the Undertaxed Payment Rule in 2024. However, the project is running around one year behind schedule. It means Switzerland’s intended implementation timeline matches plans of (most) other countries. 

Current Status

After a consultation procedure, the Federal Council released the dispatch including the draft of the constitutional amendment to Parliament on 23 June 2022. It is now up to the chambers of Parliament to decide on this constitutional amendment. In advance, the advisory commissions of both chambers are preparing the parliamentary procedures. One of the commissions already announced its support for the government’s proposal on 26 August 2022. The constitutional amendment will be subject to a mandatory public referendum which is scheduled for June 2023. 

The actual implementation, however, is to be executed by the Federal Council by means of an ordinance. On 17 August 2022 a draft ordinance governing technical details was already published for consultation. A separate draft governing the relevant procedures is set to follow once more OECD guidance becomes available. 

The available draft ordinance provides for implementation of: 

  • (Qualified) Domestic top-up tax (“schweizerische Ergänzungssteuer”)
  • Income Inclusion Rule (IIR)
  • Undertaxed Payment Rule (UTPR) – without exclusion in the initial phase according to article 9.3 of the model rules 

The draft mainly refers to the OECD Pillar 2 model rules for the determination of the respective top-up tax. Furthermore, it states that the model rules are to be interpreted in accordance with the respective OECD commentary to the model rules. This ensures best that the Swiss implementation is in line with the OECD rules and internationally accepted. Furthermore, with the reference to the model rules, Switzerland, for instance, also adopts the de minimis exclusion.

Against this background, business leaders should be asking three key questions to prepare for Pillar 2 implementation in Switzerland:

1. Which companies are affected?

The Swiss domestic top-up tax is applicable to Swiss constituent entities of international groups with consolidated turnover of at least EUR 750 million. However, if the country of the ultimate parent of such a group applies a lower threshold (for the IIR), then the Swiss domestic top-up tax is also applicable for such Swiss constituent entities. Apart from that, the Swiss domestic top-up tax shall not be conditional on other factors such as the tax residence of the ultimate parent or whether other jurisdictions would apply a top-up tax. 

2. What happens next?

The consultation procedure on the draft ordinance runs until 17 November 2022. Furthermore, Parliament is expected to decide on the constitutional amendment by December 2022. If the public referendum in June 2023 confirms the amendment, the Federal Council currently intends to implement the minimum taxation as of 1 January 2024. However, in case the implementation of the global minimum tax would be (further) delayed in other countries (in particular in the EU and the UK), the Federal Council may decide to implement the minimum taxation only at a later point in time. Accordingly, timing remains somewhat flexible to take into account international developments.

3. What should companies do now?

The question is not if, but when, the minimum taxation will be implemented. Accordingly, companies should analyze to what extent they’re affected by the minimum taxation – and how they could fulfill the new reporting and compliance requirements. Many companies have started projects with a particular focus on the required data and its availability (data mapping).

Moreover, companies should be aware that investors may expect to see disclosures about potential impacts before the changes to local tax laws are finalized. If companies expect to be significantly affected by global minimum taxation, and regard this information as relevant for users of their financial statements, they should consider providing disclosures in both their 2022 interim and annual reports. The appropriate level of disclosure should be determined once the need to report potential aspects has been clarified. Further information can be found here.

We continue to follow Pillar 2 developments in Switzerland closely and will share our take on implementation as it progresses.

Our services and further information