Switzerland - Pillar Two implementation approved in referendum

On 19 June 2023, the electorate and the cantons overwhelmingly approved (78.45% to 21.55%) the federal decree of 16 December 2022 on the special taxation of large multinational enterprises (MNEs), which would allow Switzerland to introduce the Global Anti-Base Erosion (GloBE) rules under the OECD/G20 Pillar Two project.

The GloBE rules released by the OECD aim to ensure that large MNEs pay a minimum level of tax on the arising in each jurisdiction in which they operate. The rules propose to accomplish this objective by implementing a “top-up tax” on an MNE group’s “low-taxed income,” i.e., profits arising in jurisdictions where the effective tax rate is below the proposed minimum rate of 15%.

As a result of the positive vote in the referendum, the Federal Council can enact a temporary ordinance allowing the introduction of the 15% minimum taxation on large MNEs. The Council is required to submit proposed legislation to parliament within six years from the date the temporary ordinance enters into force, which is expected to be 1 January 2024, depending on the implementation status in other countries.

Affected MNEs and application of GloBE rules

The GloBE rules will apply to constituent entities of MNE groups with consolidated annual turnover of EUR 750 million or more. The rules are complex and likely to increase compliance and reporting obligations for affected groups.

The first step will be for an MNE group to determine whether it falls within the scope of the rules and identify the constituent entities within the group and where they are located. The actual tax rate of each constituent entity will then have to be determined. An MNE that is subject to an effective tax rate of less than 15% in any jurisdiction will have to calculate the additional tax in relation to that jurisdiction. The additional tax will be collected from a group entity, based on the GloBE rules.

MNEs that are subject to transfer pricing documentation rules and country-by-country reporting with effect from 2018 will be able to benefit from certain safe harbours under the GloBE rules for a three to four-year transitional period starting from the date the rules apply. The safe harbours may eventually be made permanent.


According to the federal tax administration, about 100 Swiss groups and a few thousand foreign groups with a presence in Switzerland will be affected by the GloBE rules. Statistics from 2020 indicate that there are more than 600,000 companies active in Switzerland, so most such companies will not be impacted by the rules and will continue to be taxed at the current rate.

The Federal Council's ordinance is expected to be published by the end of summer 2023, thus enabling affected companies to apply the new GloBE rules correctly. By that time, the exact scope of the safe harbours should also be established.

Denis Boivin
BDO in Switzerland

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