Federal Council puts international supplementary tax into force from 2025
Published: Wednesday, Sep 4th 2024, 17:10
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The Federal Council will bring the international supplementary tax into force on January 1, 2025. In doing so, it is preventing an outflow of tax revenue abroad and creating legal certainty. The international supplementary tax extends the Swiss supplementary tax introduced in 2024.
The entry into force goes back to the approval of the OECD/G20 minimum taxation by the people and the cantons in 2023. In particular, Swiss legislation aims to prevent Switzerland from losing tax revenue to foreign countries. The international and Swiss supplementary tax serve this purpose.
With the international supplementary tax (Income Inclusion Rule, IIR), Switzerland taxes the profits of foreign subsidiaries of Swiss groups and intermediate holding companies of foreign groups at a rate of at least 15 percent. A minimum turnover of 750 million worldwide is required. The Swiss supplementary tax also ensures the 15 percent minimum taxation.
As the Federal Council announced on Wednesday, without the IIR coming into force, other countries would be able to impose the second permissible international supplementary tax on these foreign profits in accordance with the OECD/G20 minimum taxation rules.
The vast majority of EU member states, the UK, Canada and Australia intend to apply this supplementary tax, known as the UTPR, in 2025. They also introduced the IIR in 2024.
According to the Federal Council, the revenue estimates from the IIR are subject to a high degree of uncertainty. They could roughly lie between 500 million and one billion francs. According to the distribution formula, CHF 125 to 250 million of this would go to the federal government and CHF 375 to 750 million to the cantons.
The Federal Council has decided not to apply the second international supplementary tax (UTPR) for the time being. The risks would exceed the revenue potential. In addition, the UTPR is subject to legal criticism, the government announced on the basis of an expert opinion. The Federal Department of Finance (FDF) will keep an eye on developments regarding the minimum tax.
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