June 23 2022

Switzerland Declares That Majority of Revenue from OECD Minimum Tax Will Go To Cantons

Source: IBFD Tax Research Platform News

The Ministry of Finance has indicated that 75% of the additional revenue raised from the imposition of the OECD/G20 minimum 15% tax (Pillar 2) will go to the cantons, and 25% will go to the Confederation (i.e. federal government).

The Confederation will use funds to cover the additional national fiscal equalization (NFE) expenditure and to promote the attractiveness of Switzerland as a business location. For the Confederation, the proposal is budget neutral.

The cantons will receive the major part of the receipts as the companies located there are the entities actually affected by the minimum tax. These additional funds should help the cantons safeguard their appeal as business location. The cantons are free to decide how to use the revenue, but they must appropriately take (the impact on) the communes (municipalities) into account.

A constitutional amendment is required to empower the Confederation to implement the OECD/G20 minimum tax. In order to ensure that the minimum tax is introduced as from 2024, the Federal Council will draw up a temporary ordinance. This ordinance will be replaced by a federal law at a later stage.

For the full text of the announcement by the Ministry of Finance of 23 June 2022, see here (in English), here (in French), here (in German) and here (in Italian).

Note: The OECD/G20 minimum tax will be imposed on large corporate groups with worldwide turnover of at least EUR 750 million that are below the minimum taxation of 15%.