The OECD minimum tax

The Swiss implementation

The second pillar of the OECD and G20 project on the taxation of the digital economy, agreed in October 2021, introduced a global minimum effective tax rate of 15 per cent for multinational groups with consolidated annual revenues of at least 750 million euros. The GloBE model rules provide for three mechanisms: a qualified domestic minimum top-up tax (QDMTT), with which the state of the low-taxed entity collects the difference itself, an income inclusion rule (IIR), with which the state of the parent entity collects it, and an undertaxed profits rule (UTPR) as a backstop.¹ For Switzerland, whose cantons had just reduced their rates after the TRAF, the minimum tax was a direct challenge. In a number of cantons, including Zug, Lucerne, Basel-Stadt and Geneva, the ordinary effective rate lay below 15 per cent.

The Federal Council chose to implement the minimum tax quickly by constitutional amendment and ordinance, without waiting for a full federal statute. The electorate accepted the constitutional amendment on 18 June 2023 by 78.5 per cent. The new provision allows the Confederation to levy a supplementary tax on large groups by ordinance for a transitional period while allocating 75 per cent of the revenue to the cantons and 25 per cent to the Confederation. On that basis the Federal Council put the national supplementary tax, which corresponds to the QDMTT, into force on 1 January 2024. On 4 September 2024 it decided to add the international supplementary tax, which corresponds to the IIR, with effect from 1 January 2025, in order to prevent Swiss tax base from flowing abroad. It has not introduced the UTPR, citing legal uncertainty and a revenue potential of only 100 to 300 million francs that it considered disproportionate to the risks. The Federal Department of Finance estimated that the national supplementary tax would initially produce roughly one to 2.5 billion francs a year and the international supplementary tax between 0.5 and one billion francs, with the first revenues expected in 2026.²

The legal instrument is the Ordinance on the Minimum Taxation of Large Groups of Companies (Mindestbesteuerungsverordnung, MindStV), which refers statically to the OECD model rules and requires that they be interpreted in accordance with the OECD commentary and the administrative guidance. The static reference means that later OECD guidance does not automatically become Swiss law, although the ordinance directs the authorities to interpret the rules in line with it. On 7 April 2026 the Federal Tax Administration published two communications on the implementation of the OECD administrative guidance, both approved by the Swiss Tax Conference. The second of them concerns the “side-by-side” package of 5 January 2026, including the simplified effective tax rate safe harbour and the safe harbour for substance-based tax incentives.³

The side-by-side package was the Inclusive Framework’s response to the refusal of the United States to adopt the GloBE rules. Its effect is that two minimum tax systems now apply in parallel. Groups whose ultimate parent entity is in the United States are exempt from the IIR and the UTPR of other states, although a domestic top-up tax such as the Swiss national supplementary tax continues to apply to their Swiss subsidiaries. Two parliamentary motions adopted in December 2025 ask for greater legal certainty. The Federal Council must now examine which amendments to the Swiss framework the new OECD guidance requires.⁴ The safe harbour for substance-based incentives is of direct interest to cantons with high rates, since it may allow certain relief linked to real activity to be disregarded when the effective rate of a group is computed.

Consequences for Zurich

At an ordinary effective rate of about 19.5 per cent, the city of Zurich lies well above the minimum. The Zurich rate therefore does not by itself trigger a top-up tax. Unlike Basel-Stadt, Geneva and Vaud, which have raised their rates or planned to do so, Zurich had no need to adjust. A Zurich group company may nevertheless fall below 15 per cent. This happens when it combines the patent box, the research deduction and the deduction for self-financing, because these instruments can reduce the effective burden to about 11.8 per cent. Under the GloBE rules some of these reliefs count as reductions of covered taxes. A group within the scope of the minimum tax will therefore often find that the benefit of the patent box is partly absorbed by the national supplementary tax. Research and development incentives are treated more favourably when they take the form of qualified refundable tax credits. Since the Swiss instruments were not designed in that form, a debate has begun on whether they should be redesigned.⁵

The revenue of the supplementary tax flows mainly to the cantons in which low-taxed group companies are located. For Zurich the direct gain is therefore smaller than for Zug or Basel-Stadt. The public debate in Zurich has concentrated less on the use of new revenue than on the competitive position of the canton. Basel-Stadt created a location promotion fund that returns part of the additional revenue to companies in the form of targeted support. Zurich’s government preferred a general reduction of the profit tax rate, which would have lowered the average burden from 19.6 to about 18.1 per cent at an estimated annual cost of 350 million francs. A development organisation critical of both approaches described the Zurich plan as an example of the downward pressure that the minimum tax exerts on rates above 15 per cent.⁶ After the rejection of the rate reduction in May 2025 that plan has been put aside, at least for the time being.

The minimum tax has changed the logic of intercantonal competition for large groups. A group within its scope gains little from moving a profitable entity from Zurich to Zug, because the lower Zug rate is topped up to 15 per cent. The remaining difference between about 19.5 per cent in the city of Zurich and 15 per cent is still considerable. Large groups will therefore continue to weigh the Zurich labour market against the Zug and Schwyz rates. For groups below the threshold, which include most independent asset managers, family offices and smaller financial intermediaries, nothing has changed. They continue to face the full difference between the cantons.

The minimum tax has also affected the practice of rulings. Before 2024 many groups had obtained advance rulings confirming the application of the TRAF instruments. Such rulings remain valid for cantonal and federal taxes, but they do not govern the computation of the supplementary tax, which follows its own rules. For groups in the scope of Pillar Two, advisers therefore compute the GloBE effective rate for each jurisdiction and treat the Swiss cantonal reliefs as one variable among many.

Notes

1. OECD, Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two), Paris, 20 December 2021, as summarised in DLA Piper, “OECD issues detailed rules to implement global minimum tax: a look at the 10 chapters” (21 December 2021), including the revenue threshold of 750 million euros in at least two of the four preceding fiscal years and the IIR, UTPR and QDMTT, https://www.dlapiper.com/en/insights/publications/2021/12/oecd-issues-detailed-rules-to-implement-global-minimum-tax-a-look-at-the-10-chapters. ↩
2. EFD, “Umsetzung der OECD-Mindeststeuer in der Schweiz”, https://www.efd.admin.ch/de/umsetzung-oecd-mindeststeuer-schweiz. ↩
3. oecdpillars.com, “Switzerland’s April 2026 Pillar Two Statements: Implementation of the OECD Administrative Guidance”, https://oecdpillars.com/switzerlands-april-2026-pillar-two-statements-implementation-of-the-oecd-administrative-guidance/. ↩
4. KPMG Switzerland, Clarity on Swiss Taxes (May 2026), cited above. KPMG notes that substance-based incentives that promote investment, employment and research and development are becoming increasingly important. ↩
5. Under the GloBE rules a qualified refundable tax credit is treated as income and not as a reduction of covered taxes, which is more favourable for the effective tax rate: DLA Piper (n. above). BAK Economics, media release of 23 July 2026 on research and development, notes that the minimum tax limits the effect of tax incentives for research and development, that cantons partly use the supplementary tax revenue to fund support programmes for research and development, and that the “Side-by-Side” package permits limited expenditure-based incentives, https://www.bak-economics.com/fileadmin/documents/medienmitteilung/2026_07_BAK_Medienmitteilung_BTI_FuE.pdf. ↩
6. Alliance Sud, “Die Wellnessprogramme für multinationale Konzerne in Basel-Stadt und Zürich”, https://www.alliancesud.ch/de/die-wellnessprogramme-fuer-multinationale-konzerne-basel-stadt-und-zuerich. ↩

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.