What impact will implementation of OECD minimum taxation have in Switzerland?

What?

• Switzerland is one of over 140 countries striving to make the international tax system fit for our globalised and digital economy. Among other things, this has resulted in the OECD minimum taxation rules.
• Affected companies are to pay at least 15 percent tax (also known as the ‘effective tax rate’) on their profits in every country in which they operate.
• The majority of EU member states and other major industrialised nations are already implementing the minimum tax rate from 2024.
• Switzerland has also introduced the OECD minimum tax as of 1 January 2024.
• This minimum tax will initially be implemented by levying a top-up tax in Switzerland on the companies concerned (Swiss domestic top-up tax).
• The OECD rules also provide for two additional international top-up tax mechanisms. It remains to be seen whether these will be introduced in Switzerland. The Federal Council is expected to decide by the end of 2024.

Who?

• Large, multinational enterprise groups with consolidated revenues of at least EUR 750 million per year are affected by the OECD minimum tax.
• If an affected corporate group has a connection to Switzerland – for example by virtue of a subsidiary, a permanent establishment or even due to having Swiss group headquarters – this entity is generally subject to Swiss top-up tax.

How?

• There are complex rules for calculating the OECD minimum tax and the Swiss top-up tax.
• If an affected entity does not reach the required minimum tax rate of 15 percent in Switzerland, the amount is ‘supplemented’ by the Swiss top-up tax.
• But beware: All entities of the affected group of companies in Switzerland must be included in the calculations.
• Good to know: Certain safe harbours are available on a transitional basis; these are based on CbCR figures of the corporate group. If a Swiss entity qualifies for at least one of these safe harbours, it will not be subject to Swiss top-up tax this year.

Where?

• The cantons are responsible for assessing Swiss top-up tax. If several cantons are involved, the canton with the most economically significant entity takes the lead.
• However, companies are obliged to co-operate. They must report the Swiss top-up tax annually in a separate declaration via an online portal. Only one declaration is required for all Swiss entities. The online portal is currently under development.
• It should be noted that, in principle, a declaration must also be submitted locally for each group entity in accordance with OECD regulations (in what is known as the ‘GloBE Information Return’ (GIR)).
• However, a group of affected companies may decide to submit only one OECD declaration for the entire group. In this case, filing in Switzerland may no longer be necessary.

When?

• OECD minimum taxation, or the Swiss top-up tax, applies to financial years beginning after 1 January 2024.
• The declaration for the Swiss top-up tax must be submitted within 15 months of the end of the financial year in question. Exceptionally, the declaration for 2024 is not due until June 2026 (after 18 months).
• Filing deadlines for the OECD declaration (GIR) are identical.
• The transitional CbCR safe harbours are available for financial years beginning before 31 December 2026 and ending before 1 July 2028.

How we support you

BDO is your sounding board for all issues relating to OECD minimum taxation and Swiss top-up tax. Our approach is tailored to the specific needs of your company. We offer you the following services:

• Impact assessment:
  We carry out basic clarifications to establish whether your group and Swiss entities are affected, prepare tax modelling and calculations in accordance with the OECD GloBE Rules and clarify specific accounting issues.
• Strategy and planning:
  We support you with the implementation and (global) roll-out of reporting required for OECD minimum taxation, coordinate the requirements of different countries and assist you in selecting suitable software solutions.
• Compliance support:
  We ensure that all compliance obligations are met, prepare regular reports, carry out extended analyses and monitor the global legal situation with regard to OECD minimum taxation.

We look forward to assisting you with clarifications. Benjamin Thumm, Head of the BEPS 2.0/Minimum Tax Working Group at BDO, will be pleased to answer your questions.