On Sep. 4, SWI GVT updated on international supplementary tax.
SWI Tax, SWI SECO announced decision to bring the income inclusion rule (IIR) international supplementary tax into force with effect from 1 January 2025.
Published expert report of Aug. 23, 2024 commission from Prof. Dr. iur. René Matteotti.
This international supplementary tax will complement the Swiss supplementary tax (QDMTT) introduced in 2024, both aim to ensure tax receipts stay in Switzerland.
In 2023 citizens, cantons voted in favor of introducing OECD/G20 minimum tax rate in Switzerland, to prevent country foregoing tax receipts in favor of foreign countries.
On Sep. 4, 2024, SWI GVT also decided to bring the IIR into force on Jan. 1, 2025.
With this tax, profits of foreign subsidiaries of Swiss corporate groups, as well as those of intermediate holding companies of foreign corporate groups, are taxed at 15%.
Provided the corporate group's global annual turnover is at least €750 million.
If IIR not brought into force, other jurisdictions could tax these foreign profits as per OECD/G20 minimum taxation rule by applying the undertaxed profits rule (UTPR).
Most EU member states, UK, Canada, Australia are planning to apply the UTPR from 2025 onwards, following their introduction of both the IRR and QDMTT in 2024.
By bringing IIR into force, Switzerland can secure receipts which can then be used to strengthen the country's attractiveness as a business location, provide legal certainty.
No UTPR for Now
SWI GVT also decided not to bring UTPR into force for the time being, thinks risks of it could outweigh revenue potential, UTPR subject to criticism from a legal standpoint.
But will continue to keep a very close eye on international developments with respect to the implementation of the OECD/G20 minimum tax rate.
Nov. 2024 Update
On Nov. 20, 2024, SWI GVT, Tax announced change to OECD minimum taxation order.
At meeting of Nov. 20 Federal Council decided to amend Minimum Taxation Ordinance.
It did so in relation to the entry into force of international supplementary tax (i.e. IIR).
IIR expands Swiss supplementary tax introduced in 2024; both ensure tax revenue resulting from OECD minimum taxation remains in SWI instead of flowing abroad.
Potential tax revenue for entire state initially estimated at 1.5 to 3.5 billion francs; this could be skimmed off by foreign countries if Switzerland were to forego minimum tax.
Implementation ensures legal certainty and protects affected corporate groups from additional tax procedures abroad; change effective Jan. 1, 2025, explanation issued.
Regulators
SWI GVT; SWI SECO; SWI Tax
Entity Types
Corp
Reference
MindStV, PR, 11/20/2024; PR, Mt, 9/4/2024; Rp 8/23/2024
