It’s official: Switzerland to implement Pillar 2 in a gradual approach - Tax and Legal blog


The Federal Council decided at its meeting today that Switzerland will introduce the global minimum tax (“Pillar 2”) in a gradual approach. Specifically, from 1 January 2024, Switzerland will levy a national top-up tax (QDMTT) on profits of Swiss corporations and permanent establishments of international groups. The international top-up tax (IIR, UTPR) on profits of foreign subsidiaries and permanent establishments of Swiss headquartered groups will be introduced at a later stage (potentially 1 January 2025). What does this decision mean in detail?

Federal Council’s Decision

In a public vote in summer 2023, Switzerland approved the introduction of the global minimum tax in Switzerland by a large majority. The amended constitution gives the Federal Council (“Bundesrat”) the competence to introduce a minimum tax regime in line with the OECD Model Rules. Based on this competence, the Federal Council issued a draft ordinance regulating the specific implementation in Switzerland (“Mindestbesteuerungsverordnung”, “MindStV”).

At its ordinary meeting today, the Federal Council took the long-awaited decision to bring this ordinance into force on 1 January 2024, but only partially. In detail, this decision includes the following elements:

  • As of 1 January 2024, a national top-up tax (“Schweizerische Ergänzungssteuer”), in line with the OECD framework for the Qualified Domestic Minimum Top-up Tax (QDMTT), will be levied on profits of corporations and permanent establishments in Switzerland, which are effectively taxed below 15%. This national top-up tax (QDMTT) will be broadly aligned with the OECD Model Rules. Only corporations and permanent establishments of multinational groups with revenues of more than EUR 750 mio. will be in scope.
  • The international top-up tax (“Internationale Ergänzungssteuer”), based on the Income Inclusion Rule (IIR) and the Undertaxed Payments Rule (UTPR), which would be levied on the on the profits of subsidiaries (corporations, permanent establishments) outside Switzerland without an effective tax rate of at least 15%, will be introduced at a later stage, depending on international developments. 1 January 2025 is mentioned as a probable date.
  • As the national top-up tax will be levied in accordance with the OECD Model Rules and the related documents (Commentary, Administrative Guidance), the transitional CbCR safe harbours will also be applied by Switzerland for the next three years.

Deloitte Switzerland welcomes the Federal Council's decision, which is a compromise between the public’s clear vote for a minimum tax of 15% and international developments. Switzerland is one of the countries that will be the first to implement a domestic top-up tax, along with the European Union (excl. Baltic States, Malta, and Slovakia), the UK, Australia, Japan, South Korea and Canada.

What does this decision mean in technical terms?

Multinationals Headquartered in Switzerland

Swiss corporations and permanent establishments of Swiss multinational groups with a minimum revenue of EUR 750 mio. will be subject to the new national top-up tax (QDMTT) from 1 January 2024. This will result in a significant administrative burden and - depending on the individual case - additional taxes. As the tax base of the national top-up tax (QDMTT) differs significantly from that of the Swiss corporate income tax, it cannot be automatically concluded that companies in high-tax cantons (e.g., Zurich, Bern) do not have to pay top-up taxes or vice versa.

As the revenue threshold is defined in euro and the Swiss franc tends to strengthen against the euro, privately-owned groups and family offices will be increasingly affected by this new tax. 

At the same time, affected Swiss groups with subsidiaries and permanent establishments in jurisdictions that have not (yet) introduced the global minimum tax and have a rather low effective tax rate will not have to pay the international top-up tax (IIR) for the next year(s) (until a decision by the Federal Council). This applies in particular to affiliates in countries in the Middle East, Asia and the Caribbean, which have also delayed the introduction to 2025 or have not yet released a timetable for the enforcement.

The transitional CbCR safe harbours will apply for the next three years, which means that no complex calculations will have to be carried out and no additional taxes will have to be paid, depending on the individual case.

Multinationals Headquartered outside Switzerland

Multinational groups that are headquartered outside Switzerland but have affiliates (corporations, permanent establishments) in Switzerland will also be levied with the national top-up tax (QDMTT). At the same time, if such multinational groups are headquartered in a jurisdiction which has not (yet) introduced the global minimum taxation and have a directly held sub-holding company in Switzerland with subsidiaries in a country which has also not (yet) introduced the global minimum taxation, will also benefit for the next year(s) without additional taxes. As an illustrative example, a US-based MNE with a sub-holding company in Switzerland will not have to pay an international top-up tax (IIR) in Switzerland on the profits of its foreign affiliates, for example in the Middle East or selected Asian countries, as long as these jurisdictions have not (yet) introduced a QDMTT.

Swiss Specifics

In contrary to foreign countries (e.g., European Union), Switzerland has not directly adopted the OECD Model Rules into the Ordinance, but refers statically to the OECD Model Rules of 14 December 2021 and dynamically to the associated Commentary and Administrative Guidance (without specifying a version). This means that the affected groups must consider any new documents or versions of the commentary which will be released by the OECD in the next months and years.

The national top-up (QDMTT) tax will be levied either based on an internationally accepted accounting standard of the ultimate parent entity (e.g., IFRS, US GAAP) or the domestic “true and fair view”-standard Swiss GAAP FER (under certain conditions).

The national and international top-up taxes are assessed centrally by one canton. If a group has several group companies in Switzerland in different cantons, a lead canton is determined on the basis of the ordinance ("one-stop shop"). We recommend each group to identify this canton.

Switzerland is known for its transparent and open collaboration between taxpayers and the tax administration. Deloitte has already discussed several open questions regarding the interpretation of the OECD Model Rules with Cantonal Tax Administrations on behalf of its clients. This is a great advantage, particularly in view of the fact that the OECD Model Rules are often vague and allow for multiple interpretations.

We expect that various cantons will introduce in the coming months new tax incentives that comply with the OECD Model Rules (e.g., Qualified Refundable Tax Credits, QRTC). This means that Switzerland will remain an attractive location despite the introduction of the global minimum tax.

Next Steps

Global minimum taxation is coming to Switzerland - time to act! The implementation of the global minimum taxation is a highly complex and demanding project that requires resources on a material scale. With the Federal Council's decision to introduce it from 2024, now is the time to engage with this issue. Our Deloitte specialists will be happy to support you. As part of our Pillar 2 roundtable series, we will host an invitation only event on 29 February 2024 in Zurich to discuss specific Swiss topics and its effect under the global minimum taxation (in German). Please reach out to us if you are interested to attend.

If you would like to discuss more on this topic, please do reach out to our key contacts below.

Key contacts

Thomas Hug_blog

Thomas Hug - Partner, National Tax Office  

Thomas is the leader of Deloitte Switzerland's National Tax Office. He has a proven track record of being at the forefront of international tax developments and analysing their impact from a Swiss tax technical perspective. Thomas has published thought leading articles and books, and is frequently asked by industry groups, universities and tax and accounting associations to hold presentations or lead seminars. He serves as a substitute judge at the Zurich Tax Court of Appeal. He is a seasoned tax professional with more than 15 years of practical experience and a strong expertise in Swiss tax law, transfer pricing, tax accounting & reporting (IFRS, USGAAP, Swiss GAAP FER), and pillar 2.

Thomas is co author of the first comprehensive book on Swiss transfer pricing law and author of a book on tax accounting & reporting in Switzerland, considering the OECD Model Rules. He serves as a substitute judge at the Zurich Tax Court of Appeal. Thomas is examiner for the Swiss Certified Tax Experts examinations, and a member of EXPERT suisse, Schweizer Verband für Rechnungslegung und Controlling, and Schweizerische Vereinigung der Richterinnen und Richter.


Blog_Daniel stutzmann110x110

Daniel Stutzmann - Partner, Global Minimum Taxation 

Daniel is a Tax Partner with 18 years of experience as an international corporate tax specialist. This includes a one-year assignment in the US to lead the Swiss ICE Desk of Deloitte. He is a specialist in the proposed OECD Pillar 2 legislation and its impact and leads the Deloitte Switzerland Pillar 2 team. In addition, he is co-leading the Deloitte Global Pillar 2 technical advisory group.

Daniel has extensive experience in the area of cross-border structuring (like establishing tax efficient IP- and financing structures) as well as business reorganizations including large supply chain transformation projects. This also includes advising several multinationals in moving their worldwide/regional headquarters or central functions to Switzerland.

As a Swiss tax expert he has managed the Swiss tax compliance of hundreds of companies in Switzerland from various industries. He is well acquainted with the Swiss tax authorities and has successfully led various tax audit and tax ruling negotiations with the Swiss tax authorities. He also has broad knowledge in tax accounting and tax reporting both from an advisory and audit side. Daniel leads the business tax practice in Switzerland.


Manuel Angehrn110x110

Manuel Angehrn - Director, Global Minimum Taxation  

Manuel is a Director with over 10 years of experience in International Tax. He is a Deloitte Switzerland’s Global Minimum Tax subject matter expert. He follows domestic and global tax developments and assesses the impact to Swiss multinationals.



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