News Taxes

OECD/G20-minimum taxation: Income tax: Swiss voters say Yes

On Sunday, June 18, 2023, the Swiss electorate approved the implementation of the OECD/G20 project on the taxation of large corporate groups in Switzerland with a clear "Yes" (78.45%).

The constitution will be amended in a way that in the future multinational companies with a consolidated annual turnover of EUR 750 million or more will have to be subject to a minimum taxation of 15% (effective profit tax rate). Thus, one falls under the minimum taxation under the following conditions:

Multinational company: at least two business units (subsidiaries and permanent establishments) in two different countries; and
Minimum worldwide consolidated turnover of EUR 750 million in two of the last four fiscal years.

The Federal Administration expects that about 100 Swiss groups and a few thousand foreign groups with business units in Switzerland concentrated in the cantons of Zug and Basel-Stadt will be affected. All other companies (about 600’000 according to the Federal Administration) that do not cumulatively meet the above conditions will not be affected by this reform. Implementation is expected to take place on January 1, 2024.

With the constitutional amendment, the Swiss principle “tax follows accounting” of the commercial balance sheet as the basis for determining taxes is also overturned. Affected companies must now also prepare financial statements in accordance with a recognized accounting standard (e.g., IFRS, US GAAP or Swiss GAAP FER), which, after corrections in accordance with the OECD/G20 Global Anti-Base Erosion Model Rules ("GloBE Rules"), serves as the basis for determining the minimum taxation. If this results in a lower taxation than 15%, a supplementary tax is levied on the difference. Due to the GloBE Rules, it is not possible to define per se which companies are affected by the minimum taxation on the basis of the ordinary profit tax rates of the cantons. Thus, in certain constellations, it is possible that a company domiciled in Zug meets the minimum taxation (despite an effective profit tax rate of around 12%) but a company domiciled in Zurich (despite an effective profit tax rate of around 20%) falls below it.

It is advisable to carefully check whether or not you are subject to minimum taxation according to the above conditions. Please note that you also fall under the minimum taxation as a "smaller" Swiss group company as part of an (international) group with at least EUR 750 million. The regulation on the implementation should be published by the Federal Council at the end of summer and then provide further clarity.

For any further questions or advice, please contact Remo Merz, Swiss certified tax expert, merz@fineac.ch.

WHAT we do is not unique, but HOW we do it.

Remo Merz, 20 June 2023

Keywords: OECF, G20-minimum taxation, income tax