Harmonisation, Equalisation and Reform (1990–2026) — conclusion

Conclusion of Part B

Part B has followed the tax policy of Zug from its hesitant beginnings in the 1920s to the global minimum tax. Three phases stand out. In the interwar years, the canton, under the pressure of Zurich lawyers and in the context of industrial crisis, created a special regime for holding companies, first ineffectively in 1924 and then decisively in 1930. In the post-war decades, the tax law of 1947 and the administrative practice on mixed companies extended the regime to active trading and service companies and made Zug the seat of thousands of companies, including the first commodity traders. After federal harmonisation had codified the model from 1990, international pressure from the European Union and the OECD brought about its abolition. The TRAF of 2019 replaced the status regimes with general low rates and internationally accepted instruments, without any loss of the canton's position at the top of the Swiss tax rankings.

The moral economy of this policy is the moral economy of the small state: the priority of the community's fiscal survival, the acceptance of a world that the canton cannot shape and a sense of the reputational limits of its choice. The canton's voters have endorsed the policy in every major vote since 1922. Its counterpart is the national fiscal equalisation, through which Zug transfers a larger share of its fiscal potential to the rest of the country than any other canton. The canton has responded to the floor that the global minimum tax has set under the competition for large groups by securing the revenue for itself and by investing it in its other assets.

In five sentences

1. Zug introduced its first holding privilege by popular vote in January 1922 and made it effective through the law of 15 July 1930, which exempted holding companies from profit tax and taxed their capital at 0.5 to 1.5 per mille, as a crisis measure in a time of industrial decline.

2. The tax law of 1947 and the administrative practice on mixed companies developed by the tax administration in the late 1950s turned the privilege into a business model under which the number of holding companies rose from 88 to 4,828 within a generation.

3. After the harmonisation law of 1990 had codified the cantonal status regimes, the pressure of the European Union and the OECD led to their abolition by the TRAF, approved on 19 May 2019 and in force since 1 January 2020.

4. Zug replaced the privileges with the lowest general profit tax rate in Switzerland, 11.85 per cent in 2025, and with the maximum permitted use of the patent box and the research deduction.

5. The counterpart of the canton's low taxes is its contribution to the national fiscal equalisation, 467 million francs in 2026, while the global minimum tax, which Zug approved with the highest majority of all cantons, has set a floor under the competition for large groups.

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.