Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

June 20, 2023

Switzerland votes to amend Constitution to allow Pillar Two implementation

  • On 18 June 2023, Switzerland approved the legal basis for the introduction of Pillar One and Pillar Two of the OECD/G20 BEPS 2.0 project in the form of a constitutional amendment by a public vote.
  • For Pillar Two the constitutional amendment includes a transitional provision that allows the implementation of the Pillar Two rules by ordinance of the Swiss Federal Council until a permanent tax bill is enacted by the Swiss Parliament.
  • The Swiss Federal Council expects the Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-up Tax (QDMTT) to be applicable as per 1 January 2024; no final decision has been taken yet regarding the implementation of the Undertaxed Profits Rule (UTPR).
  • There are currently no concrete plans to implement Pillar One.

Executive summary

With the approval in Switzerland of a constitutional amendment1 in a public vote on 18 June 2023, a majority (78.5%) of Swiss elective citizens as well as all 26 Cantons (result of the popular vote per Canton) cleared the way for the introduction of Pillar One and Pillar Two rules of the OECD/G20 Base Erosion and Profit Shifting (BEPS) 2.0 Project into Swiss domestic law. The constitutional amendment provides the legal basis for the implementation and the competence for the Swiss Parliament to introduce Pillar One and Pillar Two taxes in federal tax bills if deemed adequate. Due to the ambitious timeline set forth by the OECD, the constitutional amendment also contains a transitional provision for Pillar Two that gives authority to the Swiss Federal Council to introduce the Pillar Two rules by way of an ordinance until the Swiss Parliament enacts a federal tax bill.

Detailed discussion

Key elements of the constitutional amendment

The constitutional amendment creates the legal basis to introduce new federal taxes for large multinational enterprises (MNEs) to achieve taxation in market jurisdictions (Pillar One) as well as minimum taxation (Pillar Two) if deemed adequate. The approval of the public vote and the respective amendment of the Swiss Constitution do not have an immediate effect on the implementation and enactment of Pillar One or Pillar Two in Switzerland.

Key elements of the constitutional amendment include:

  • Due to the urgency of the implementation resulting from the ambitious timeline set forth by the OECD, the Constitution includes a transitional provision that gives the Swiss Federal Council authority to implement Pillar Two in a first step by way of an ordinance until the permanent tax bill is enacted.
  • Most principles in the transitional provision replicate the basic principles of the Pillar Two Model Rules, including the scope (MNEs with a consolidated annual turnover of more than EUR 750m), the minimum tax rate (15%), the calculation of the effective tax rate, and the consequences if the effective tax rate in Switzerland stays below the 15% minimum tax rate (levying of a top-up tax in the amount of the difference by way of the IIR, the UTPR and a domestic top-up tax likely in form of a QDMTT).
  • The transitional provision contains a paragraph that stipulates that the Swiss Federal Council may deviate from the above principles if deemed necessary. This provides the flexibility needed for the Swiss Federal Council to still react to developments at the OECD level and in other jurisdictions and to implement Pillar Two in the best interest of Switzerland.
  • The Federation receives 25% of the additional proceeds resulting from Pillar Two taxes, and the Cantons are entitled to 75%. The transitional provision regulates the basic allocation of the top-up tax revenue between Cantons. The income from the QDMTT is allocated to the Canton of the Constituent Entity causing the under-taxation in Switzerland. The income from the IIR and UTPR is allocated to the Canton of the top Constituent Entity in Switzerland.
  • The Swiss Federal Council must provide the Swiss Parliament with a draft permanent tax bill for the implementation of Pillar Two through the ordinary legislative procedure within six years after the transitional introduction of the Pillar Two rules by ordinance.

Transitional implementation of Pillar Two by ordinance

Parallel to the constitutional amendment, the Swiss Federal Council had already released drafts of the transitional ordinance on Pillar Two for public consultation:

  • A first draft of the ordinance focuses on the technical aspects with direct references to the Pillar Two Model Rules and only limited additional Swiss regulations. The Swiss specific articles govern the attribution of additional income of the Pillar Two taxes within Switzerland. The public consultation on the first draft ended on 17 November 2022.2
  • The second draft of the ordinance focuses on the procedural aspects of the Swiss Pillar Two implementation. It was published on 24 May 2023 and the public consultation period continues until 14 September 2023.3


With the public vote Switzerland amended the Constitution and created the legal basis for the Swiss Parliament to work on federal tax bills to implement Pillar One and Pillar Two. There are currently no concrete implementation plans for Pillar One. Regarding Pillar Two, the Swiss Federal Council plans to make use of the transitional provision to implement Pillar Two by way of an ordinance for up to six years. With the second public consultation on the draft ordinance continuing until 14 September 2023, the Swiss Federal Council will likely issue the transitional Pillar Two ordinance in the last quarter of 2023. The ordinance will formally implement Pillar Two in Switzerland.

According to the draft ordinance and the relating commentary, the Swiss Federal Council expects the IIR and QDMTT to enter into force on 1 January 2024 whereas no final decision has been taken yet regarding the implementation of the UTPR (deferred to at least 1 January 2025).

The Swiss Federal Council has the possibility to quickly adjust its ordinance (e.g., to react to any unintended effects or problems that occur in practice or to make changes to improve the attractiveness of Switzerland as a business location). Such updates are not subject to Parliamentarian approval or a public consultation.

The timeframe of up to six years to prepare the permanent tax bill will allow those who draft the bill to draw on experience with the regulation based on the ordinance and will lead to a law already proven over multiple tax periods.

Switzerland seeks to maintain its attractiveness as a business location by minimizing impact of the BEPS 2.0 project for affected companies. Furthermore, following the positive public vote, several Cantons are expected to release information on how the additional revenue from Pillar Two taxes shall be reinvested.


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

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor



1 German wording | French wording | Italian wording of the amendment.

2 See EY Global Tax Alert, Switzerland opens public consultation on material aspects of the OECD's Pillar Two minimum corporate tax | EY - Global, dated 18 August 2022.

3 See EY Global Tax Alert, Switzerland opens public consultation on procedural aspects of the OECD's Pillar Two minimum corporate tax | EY - Global, dated 25 March 2023.


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more