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January 14, 2022

Switzerland plans to implement OECD minimum tax rate for large multinational companies from 2024

Executive summary

In its session of 12 January 2022, the Swiss Federal Council decided on the basic procedural and material elements of a national implementation of the global minimum tax rate as agreed by 137 of the 141 member jurisdictions in the OECD1/G202 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), including all OECD, G20 and European Union Member States. Due to the urgency of the implementation resulting from the extremely ambitious timeline set forth by the OECD, Switzerland plans to introduce these rules by a constitutional amendment, which will require a popular vote expected to take place in June 2023. Based on that, the Federal Council will then issue a temporary ordinance to implement the minimum tax rate as of 1 January 2024. Thereafter, the respective legal basis will be prepared through the regular legislative process without time pressure. This unusual approach is intended to ensure timely implementation and to provide legal certainty to the respective corporations. The cantons will make sovereign decisions on location measures to ensure that Switzerland remains an attractive business location.

Detailed discussion

The approach proposed by the OECD to address the tax challenges arising from the digitalization of the economy consists of two pillars (Two-Pillar Solution):3 a reallocation of taxing rights with a new profit allocation and nexus rule for market jurisdictions (Pillar One) and global minimum tax rules (Pillar Two). Pillar Two stipulates that multinational enterprises with a turnover of more than €750m must be subject to a minimum tax rate of at least 15% in each jurisdiction (the minimum tax rate is calculated based on the rules provided by the OECD and may significantly differ from the statutory tax rates). If a country does not tax the respective domestic group companies at that rate, other countries can tax the undertaxed income. The Federal Council decided that Switzerland will introduce the minimum tax rate for in-scope companies, as to not forgo any tax income to which it is entitled to and to ensure that Swiss companies are not exposed to adjustments made by foreign tax authorities.

Material aspects

Switzerland will only implement the 15% minimum tax for multinational companies that are in-scope of the Pillar Two system. Most Swiss companies are therefore not expected to be impacted by these changes. The top-up tax will be collected by the cantons and the additional tax income will remain with the cantons. However, the additional tax revenue shall be subject to the existing principles of the national fiscal equalization scheme. The Federation will be the competent authority on the international level.

Impact on Switzerland as a business location

Affected companies will likely face a higher tax burden as most Swiss cantons provide tax rates of less than 15%, including the federal income tax. However, the Federal Council emphasized its willingness to ensure the attractiveness of Switzerland as a business location. The additional tax revenues will provide the cantons with the fiscal policy leeway to respond adequately in favor of the business location. Apart from the already proposed fiscal measures, such as the abolition of the share issuance tax and the forthcoming withholding tax reform, such non-fiscal locational measures will for the most part be handled at the discretion of the cantons.

Future outlook

Due to the recent publication of the Pillar Two model rules and the ongoing process at the level of the OECD, no detailed impact assessment can be made yet according to the Federal Council. However, the Federal Council is working closely with the cantons, communes and other interested parties, to ensure a timely implementation of the new global minimum tax rules in Switzerland while maintaining the attractiveness of Switzerland as a business location. Multiple working groups and consultative bodies have been set up for this purpose.

This first announcement of the Federal Council on this subject is a positive development, as timely implementation will be key to providing legal certainty to affected multinational companies. The approach expressed at the press conference of the Federal Council on 13 January 2022 to use the fiscal policy leeway to decide on locational measures at cantonal level is another positive sign for Switzerland’s continued attractiveness as a business location.


For additional information with respect to this Alert, please contact the following.

Ernst & Young Ltd, Zurich

Ernst & Young Ltd, Geneva

Ernst & Young LLP (United States), Swiss Tax Desk, New York

Ernst & Young LLP (United States), Swiss Tax Desk, San Francisco



  1. Organisation for Economic Co-operation and Development.

  2. The G20 includes the European Union and 19 individual countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, and the United States.

  3. See EY Global Tax Alert, OECD releases statement updating July conceptual agreement on BEPS 2.0 project, dated 11 October 2021.


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