12. January 2022. Following a recent agreement between the OECD and G20 member states, the Federal Council of Switzerland has decided to change the minimum company tax rate to 15%. This will come into effect on 01. January 2024.
Multinational companies with an annual turnover of more than EUR750 million will soon face a new minimum tax rate of 15% when based in Switzerland. Under the agreement, which was ratified by 137 countries, if any country maintains lower tax rates, then other countries are permitted to impose additional tax demands on the “undertaxed” companies. This rule does not apply to smaller or domestically focused companies.
Approximately 200 Swiss companies and 2’000 Swiss subsidiaries of foreign groups will be affected by the change in the law. Final details are still being concluded with the OECD.
The Federal Council of Switzerland will initially issue a temporary ordinance which will be replaced by final laws in an ordinary legislative procedure as of 01 January 2024.
Implications for Swiss based businesses
- According to the Swiss Government, certain companies will have to pay more tax in future.
- However, the 15% minimum rate will now save them having to declare their earnings abroad.
- In addition, Switzerland also claims to have fiscal policy latitude to counter any loss of attractiveness for company’s potentially looking to locate to Switzerland.
The process to implement the changes will be driven by the Federal Government which will work closely with Swiss cantons and municipalities. The Federal Department of Finance has also set up a political consultative body in which all three government levels are represented.
As a footnote: Switzerland reformed its tax rates several years ago after lobbying from the EU. Those cantons with large numbers of multinational companies paying lower preferential tax rates, then lowered the universal corporate tax rate – for example in Geneva where the rate then fell from 24.2% to 13.79%.
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