Geneva Parliament votes to abolish the Geneva Municipal Business Tax

Local contact

EY Global

23 May 2023
Subject Tax Alert
Categories Corporate Tax
Jurisdictions Switzerland
  • A recent vote would abolish the Geneva Municipal Business Tax, absent a public referendum, effective as of 2024.
  • This change would likely be beneficial for multinational entities that must comply with BEPS 2.0.
  • Affected entities should prepare for the change, as a public referendum is unlikely.

Executive summary

On 11 May 2023, the Geneva Parliament voted to abolish the Geneva Municipal Business Tax (MBT; in French: taxe professionnelle communale) with a broad political consensus.

If no public vote (referendum) takes place, the abolishment should be effective on 1 January 2024. In other words, no MBT would be due for fiscal years 2024 and following.

This change would abolish an old and complex tax, simplify compliance obligations and reduce related costs. The change offers an efficient solution for companies within the scope of BEPS 2.0 Pillar Two, potentially reducing overall tax expense.

Detailed discussion

The MBT has been levied since 18th Century by the municipalities of the canton of Geneva. Imposition of the MBT is based on:

  • Revenue and other gross income (with exceptions for certain industries and companies)
  • Annual rent paid for, or tax value of, premises the company rents/owns
  • Number of employees

The tax rate varies depending on the company's activities deployed in the canton.

Numerous multinational enterprises (MNEs) that benefitted before 2020 from the so-called preferential mixed company tax regime encounter complicated and burdensome rules. They are currently subject to MBT on their Swiss-sourced turnover on the one hand, and on their foreign-sourced qualifying expenses on the other hand. For certain foreign-sourced activities, the MBT burden recently increased significantly.

Upon the abolishment's entry into force, municipalities' loss of MBT revenues would be compensated through a corresponding increase overall of the corporate income tax (CIT) rate. The combined (federal, cantonal and communal) CIT rate would increase on average from the current 14% to 14.7%. This increase would be shared between communes based on certain formulas.

These changes should be more efficient for the companies in scope of Pillar Two of BEPS 2.0. The increased CIT could still be below the 15% global minimum tax rate and, with the MBT abolished, the overall tax expense for affected MNEs could decrease, particularly as duplication of expenses such as a top-up tax plus MBT would be eliminated.


Concerned MNEs and small and medium-sized enterprises will want to consider:

  • Following developments regarding whether or not an (unlikely) referendum vote on the MBT abolishment will be held
  • Modelling the impact of the MBT abolishment and considering, where relevant for MNEs, the potential positive impact of the change for BEPS 2.0 Pillar Two purposes


For additional information with respect to this Alert, please contact the following:

Ernst & Young Ltd, Geneva
  • Eric Duvoisin |
  • Hugo Lombardini |
  • Karen Simonin |
  • Anastasia Mushailova |
Ernst & Young LLP (United States), Swiss Tax Desk, New York
  • Stefan Ruest

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.