On 11 March 2022, the Federal Council decided that the OECD/G20 project on the taxation of the digital economy in Switzerland should be implemented in stages with a constitutional norm and transitional provisions. The corresponding consultation will last until 20 April 2022.
In autumn 2021, the OECD published a two-pillar approach to the future taxation of the digitalised economy (see our article of 9 October 2021). Pillar 1 provides for extended taxation rights for market states, Pillar 2 rules for minimum taxation.
According to the OECD/G20, Pillar 1 (market state taxation) is to be implemented via a multilateral agreement that has yet to be drawn up. The Federal Council does not intend to determine whether Switzerland should join the multilateral agreement until it is available. In the event of ratification, conflicts with existing constitutional principles are expected, in particular with the principle of equality of rights. The reason for this is that the rules of Pillar 1 should only apply to large groups of companies. Therefore, the federal legislature should already be proactively given the competence to introduce a regulation according to Pillar 1 with a constitutional amendment, without already anticipating the decision on a possible implementation (see below).
Pillar 2 (minimum taxation), the so-called GloBE (Global Anti-Base Erosion) regime, provides for a minimum taxation of 15 per cent (per state) for groups of companies with an annual turnover of at least EUR 750 million on the basis of an internationally standardised assessment base. In its consultation draft, the Federal Council now essentially proposes the following:
- Ensuring the minimum taxation of the corporate groups and business units concerned by means of a supplementary tax.
- Additional taxation in Switzerland if a group of companies operating here does not achieve the minimum taxation abroad. Thus, the additional tax revenues will accrue to Switzerland instead of other states. At the same time, companies based here would be protected from additional tax proceedings abroad.
- The supplementary tax is a new, additional federal tax. It is limited to large groups of companies that fall within the scope of the new rules. The current federal and cantonal profit tax will continue unchanged for all companies in parallel.
- The supplementary tax is to be assessed and collected by the cantons.
- If a group of companies has several units in Switzerland, those business units are taxed which in the individual case have contributed to the shortfall in the minimum taxation.
In view of the multi-layered uncertainties of the OECD/G20 project, the Federal Council proposes a step-by-step procedure for the introduction of the above approaches. In a first step, a new constitutional norm should give the Confederation the competence to implement the project. The Federal Council should then be authorised via a transitional provision, including legally binding benchmarks, to temporarily regulate the minimum taxation by ordinance in order to enable it to enter into force on 1 January 2024. The ordinance is then to be replaced by a federal law.
The Federal Council's media release and the corresponding consultation documents are available here.
