July 2021 / Switzerland

27 Luglio 2021

Switzerland assumes pioneering role in Drone Technology

The Swiss drone industry is the largest in the world as measured by market size per capita, the Swiss Drone Industry Report reveals. Developments within the industry are above all being driven by start-ups and universities. Moreover, the sector also benefits from a favorable regulatory framework.

Switzerland is assuming a global pioneering role with its drone industry, the first Swiss Drone Industry Report has revealed. According to the report, which was published by the   Drone Industry Association Switzerland (DIAS), Switzerland ranks in first place globally in terms of market size per capita.

Exports driving growth

In the current year, the Swiss drone industry looks likely to hit a market value of 521 million Swiss francs. The report assumes that this value will rise to 879 million francs by 2026. This growth is being driven by exports to the USA and Europe, with products worth 233 million francs set to be exported in the current year. In this context, the export shares are likely to be very high for both hardware (89 percent) and software (96 percent) in particular.

Universities constitute hubs

Two hubs centered on the Swiss Federal Institute of Technology in Zurich (ETH) and the Swiss Federal Institute of Technology Lausanne (EPFL) are above all the driving force behind the Swiss drone ecosystem. Accordingly, a particularly high number of start-ups have been spawned by two universities that are now active in the industry. Overall, Swiss drone companies have attracted investment totaling 214.6 million Swiss francs up to now, the report states. This equates to 3 percent of global investments made in this area.

Favorable framework conditions

According to the report, Switzerland is a fertile breeding ground for drone companies. While excellent access to talented experts certainly plays a part in this, a “fairly liberal” regulatory framework is also a key factor. Moreover, the industry benefits from active regulatory support, while the advantages of the “Swiss-made” label are also outlined in the report.

Looking ahead to the future, the report recommends that Swiss drone companies should collaborate more extensively, as this could accelerate testing and consequently the introduction of new products on the market.

DIAS engaged the services of the German market research firm Drone Industry Insights to produce the Swiss Drone Industry Report. In addition to DIAS, the report was supported by the Federal Office of Civil Aviation (FOCA), Switzerland Global Enterprise (S-GE), the Swiss Aerospace Cluster as well as the investment firm BernInvest and Innovaud, the innovation and investment promotion agency for the canton of Vaud.

Source: Switzerland Global Enterprise

2 Luglio 2021

132 Inclusive Framework Members Join Revised Two-Pillar Approach Towards Taxing The Digital Economy

On 1 July 2021, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting released a statement outlining the revised international tax framework to address the tax challenges arising from the digitalisation of the economy. The new framework envisages a two-pillar solution, colloquially referred to as "Pillar One" and "Pillar Two" proposals. The statement has been welcomed and officially joined by 132 jurisdictions-members of the Inclusive Framework.

According to the OECD, the new framework will ensure that large multinational enterprises (MNEs) pay their "fair share" of tax in the jurisdictions where they operate and produce their profits, as well as create certainty and stability for the international tax system. As per the OECD Secretary-General's words, the new revised international tax framework will not "eliminate tax competition, as it should not, but it will set multilaterally agreed limitations on it", while it will "also accommodate the various interests across the negotiating table, including those of small economies and developing jurisdictions". Therefore, the new international tax framework will aim to establish a fair and equitable international tax system without compromising the position and negotiating power of developing countries by being too complex and burdensome.

The key takeaways of the revised OECD Pillar One and Pillar Two proposals are summarised below.

Pillar One


In-scope companies will comprise the MNEs with global turnover above EUR 20 billion and profitability above 10% (i.e. profit before tax/revenue). The extractive industry and regulated financial services are excluded.

Nexus – Amount A allocation

A new special purpose nexus rule will be established permitting allocation of Amount A to a market jurisdiction when the in-scope MNE derives at least EUR 1 million in revenues from that jurisdiction. For smaller jurisdictions with GDP lower than EUR 40 billion, the nexus will be set at EUR 250,000.

Tax base determination

The relevant measure of profit or loss of the in-scope MNE will be determined by reference to financial accounting income, with a small number of adjustments. Also, losses will be carried forward.

Revenue sourcing and Quantum

Revenues will be sourced to the end-market jurisdictions where goods or services are used or consumed. Also, allocation of profits to end-market jurisdictions with nexus will be made on the basis of 20%-30% of residual profits defined as profits in excess of 10% of revenue, using a revenue-based allocation key.

Safe harbour

Where the residual profits of an in-scope MNE are already taxed in an end-market jurisdiction, a marketing and distribution of profits safe harbour will cap the residual profits allocated to the end-market jurisdiction through Amount A, as described above.

Tax certainty and elimination of double taxation

In-scope MNEs will benefit from dispute prevention and resolution mechanisms, which will avoid double taxation for Amount A, in a mandatory and binding manner. Double taxation of profits allocated to end-market jurisdictions will be avoided using either the exemption or the credit method.

Amount B

The application of the arm's length principle to in-country baseline marketing and distribution activities will be simplified and streamlined, with a particular focus on the needs of low capacity countries.

Unilateral measures

Coordination between the application of the new international tax rules and the removal of all domestic digital service taxes and other relevant similar measures, will be streamlined.

Pillar Two - GloBE


Pillar Two will consist of the following rules:

  • two domestic rules, i.e. an income inclusion rule (IIR) that aims to impose a top-up tax on a parent entity in respect of the low-taxed income of a constituent entity and an undertaxed payment rule (UTPR), which aims to deny deductions or to require an equivalent adjustment, to the extent the low taxed income of a constituent entity is not subject to tax under an IIR; and
  • a treaty-based rule, i.e. the subject-to-tax rule (STTR) that aims to allow source jurisdictions to impose limited source taxation on certain related-party payments subject to tax below a minimum rate. Jurisdictions that apply nominal corporate income tax rates below the STTR minimum rate to interest, royalties and a defined set of other payments, would implement the STTR into their bilateral tax treaties with developing Inclusive Framework members when requested to do so. In those cases, the minimum rate for STTR purposes will range from 7.5% to 9%.


Global Anti-Base Erosion (GloBE) rules will apply to MNEs that meet the EUR 750 million threshold, as determined under BEPS Action 13. Countries are, nevertheless, free to apply the IIR to MNEs headquartered in their jurisdiction, even if they do not meet the aforementioned threshold.

Minimum rate

The minimum tax rate used for purposes of the IIR and UTPR, will be at least 15%.

Effective tax rate calculation

The GloBE rules will impose a top-up tax using an effective tax rate (ETR) test calculated on a jurisdictional basis, that uses a common definition of covered taxes and a tax base determined by reference to financial accounting income.

Carve-outs and exclusions

The GloBE rules will provide for a formulaic substance-based carve-out provision that will exclude an amount of income that is at least 5% of the carrying value of tangible assets and payroll, and will establish a de minimis exclusion. International shipping income will, also, be excluded from the scope of the GloBE rules.

The Inclusive Framework intends to finalize the remaining technical work on Pillar One and Pillar Two by October 2021 and aspires to effectively implement the respective international tax rules by 2023.

Note: Seven IF member countries, namely Barbados, Estonia, Hungary, Ireland, Kenya, Nigeria and Sri Lanka, have yet to join the two-pillar approach statement. More details on the joining process will be reported in due course.