Switzerland to implement QDMTT January 1, 2024, postpone implementation of IIR and UTPR

In detail 

As part of the OECD’s led BEPS 2.0 project, Switzerland, along with some 140 other countries, has made a commitment to implement the OECD global minimum tax for MNE Groups with consolidated revenue of EUR 750M or more (also referred to Pillar Two or GloBE Rules).  

In the public vote on June 18, 2023, the Swiss voters approved the new constitutional provision on the implementation of the BEPS 2.0 project. After this vote, the Federal Council was able to implement the GloBE Rules through a temporary ordinance. 

In order to align the Swiss implementation date with the surrounding countries (i.e., the European Union and United Kingdom) and to secure that the additional Top-up Taxes stay in Switzerland, the initial planning was to implement the QDMTT and the IIR as of January 1, 2024, and the UTPR as of January 1, 2025.  

As reported in the press, over the last few weeks a majority of the Swiss economic and the political groups were requesting that the Federal Council consider postponing the entry into force. The background of this demand was that, worldwide, there are delays in enacting the Pillar Two legislation into local domestic law and important countries – like the United States, China, India, Brazil, etc. – are not implementing the global minimum tax for the time being.

What should companies focus on? 

Because Switzerland has decided to only start with the QDMTT, in-scope groups need to analyze based on their group structure what this means for the Pillar Two computation and filing position – locally as well as internationally. For example, Swiss-headquartered groups may need to assess which next Intermediate Parent Entity (IPE) in the ownership chain is subject to IIR and becomes liable for Top-up Tax of low-taxed Constituent Entities? What needs to be amended in the Pillar Two computation? What impact will the Swiss decision have on Pillar Two-related tax filing obligations? In order to be prepared, companies should lay the data, technology, and process foundation to gain comfort around their Pillar Two computations within the next few months.  

Further, action is required for the year-end discussion with the different stakeholders (e.g., audit committee, auditor, investors, etc.). In-scope groups should bring a point of view on how Pillar Two impacts the group (i.e., what has been done so far to get Pillar Two ready, what knowledge of the respective demands and challenges have been gained, what is the expected impact, what are the next steps).  

The deadline for filing the first Swiss QDMTT Return as well as for the GloBE Information Return is June 30, 2026, for a lot of groups and the Swiss tax authorities are geared up to prepare and release an e-filing solution in 2024 for the Swiss QDMTT Return. The specific compliance requirements (QDMTT and IIR) will vary by jurisdiction, depending on how and when the Pillar Two regime is adopted locally. Hence, in-scope groups will have to undertake constant regulation scanning to track a fast-evolving cross-border rule set, identify new data sets to gather, and develop new compliance processes (which may look different in each territory).