Approximately 140 countries, including Switzerland, have agreed to implement the Organisation for Economic Co-operation and Development (OECD) project to ensure that large, internationally active corporations pay a minimum tax rate of 15%. This measure is being taken in a bid to modernise the international tax system amidst increasing globalisation and to improve the distribution of corporation tax.
New constitutional norms have to be adopted and accepted by the Swiss population and cantons before this project can be implemented in Switzerland. Thus, the deal to introduce a minimum tax rate for large corporations was accepted by a very large majority of the population and unanimously by the cantons in the popular vote of 18 June 2023. It will be implemented initially when a Federal Council ordinance (OIMin) comes into force on 1 January 2024.
The new minimum tax rate will apply only to large corporations with annual sales of at least €750 million. This means that the vast majority of companies with headquarters in Switzerland (around 99%) will not be directly affected by this reform and will continue to be taxed as per current tax legislation.
It is important to note that the financial consequences of this minimum taxation remain uncertain. The actual effect will depend on the legislation of the other States and corporate behaviour. With regard to the revenue from the additional tax, 75% will be assigned to the cantons where large companies were previously subject to lower taxation. This will off-set the loss of tax attractiveness in these cantons and promote them as a business location. The Confederation will receive the remaining 25% and will allocate part of this revenue to national financial equalisation. The remainder can be used to enhance the overall appeal of Switzerland as a business location.
In its ordinance (OIMin), the Federal Council has set out the practicalities for implementing OECD and G20 minimum taxation in Switzerland within the scheduled time limit. This is accompanied by the introduction of supplementary tax, levied at federal level and intended to guarantee the collection of 15% tax. The cantons will be responsible for implementing this fiscal legislation using a combined taxation procedure similar to income tax (and the collection of direct federal tax). The entities concerned will have to submit a declaration electronically via a portal. The Federal Tax Administration (FTA) and the cantons will have access to this portal. Appeals against taxation decisions must be sent to the Federal Administrative Court.
The Federal Council also plans to create a one-stop shop for the collection of additional tax. The main corporate entity will be required to pay tax in the canton where it is located for all group entities with a registered office in Switzerland. The cantons will pay their share of the additional tax revenue to the Confederation and the cantons where the other group entities are located. This solution has been developed in conjunction with the cantonal tax offices in order to reduce the administrative burden.
The Federal Council has six years to devise a law to replace the ordinance.
In summary, the implementation of minimum taxation in Switzerland is intended to adapt the tax system in line with the realities of globalisation and to ensure fair taxation of large, internationally active corporations. This reform will require constitutional amendments and the creation of supplementary taxation. The precise financial consequences and the impact on Switzerland’s tax attractiveness remain uncertain, but measures are in the pipeline to support the cantons affected and boost Switzerland as a business location overall.
Quentin Bärtschi, Kellerhals-Carrard Berne – Switzerland