Swiss BEPS 2.0 Pillar Two implementation – Switzerland to apply QDMTT beginning 1 January 2024; IIR and UTPR delayed

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EY Global

28 Dec 2023
Subject Tax Alert
Categories BEPS 2.0 Corporate Tax
Jurisdictions Switzerland
  • The Swiss Federal Council has declared the entry into force of the Swiss implementation of the OECD BEPS 2.0 Project's Pillar Two rules beginning 1 January 2024.
  • The Federal Council may later update and improve the Pillar Two ordinance and must now propose a draft law on Pillar Two to the Swiss Parliament within six years.

On 22 December 2023, the Swiss Federal Council officially declared the entry into force of the Swiss implementation of the Organisation for Economic Co-operation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 Project's Pillar Two rules beginning 1 January 2024 (Introduction of OECD/G20 minimum tax rate with effect from 1 January 2024 ( However, only the Qualified Domestic Minimum Top-up Tax (QDMTT) will apply from 1 January 2024 onward. The application of the Income Inclusion Rule (IIR) and Undertaxed Payments Rule (UTPR) has been delayed and will be revisited at a later point in time. According to the explanatory statement released with the Pillar Two ordinance, the IIR and UTPR are likely to be introduced on 1 January 2025. This decisive step is a testament to Switzerland's commitment to complying with international tax standards while remaining an attractive business location.

Pillar Two of the BEPS 2.0 project, which stipulates a 15% global minimum tax for multinational enterprises with an annual turnover exceeding €750m, is set to reshape the tax framework. The initiative is designed to combat base erosion and profit-shifting actions by large multinational corporations, establishing a more balanced and fair global tax environment.

With the delay of the IIR and UTPR, Switzerland has reached an attractive compromise, with undertaxed income from non-implementing jurisdictions escaping taxation in 2024. Switzerland's compromise approach could present a competitive advantage in comparison with jurisdictions who fully implemented the Pillar Two rules. It could however lead to additional complexity in determining those entities subject to either QDMTT or IIR in any given jurisdiction during 2024. The impact for each group will however depend on the specific group structure, and it is therefore essential for businesses to fully analyze the nuances of the law before evaluating the potential impacts on their tax liabilities and obligations.

In parallel, the Swiss Federal Council has also unveiled the final version of its Pillar Two ordinance (the final ordinance and the respective explanatory statement can be found under the following links as a pdf in German and French Verordnung ( ( | Erläuterungen ( ( There are no substantial deviations from the draft ordinance, which was earlier subject to consultation. However, there were a few changes and clarifications on the following items:

  • Switzerland will implement the QDMTT as per 1 January 2024, with the IIR, and UTPR being delayed. The legal basis for IIR and UTPR implementation is, however, in place. Nevertheless, the IIR regulations apply to determine those constituent entities subject to tax under the QDMTT.
  • It was clarified that in any case only one constituent entity per MNE group will be responsible for reporting and paying the Pillar Two taxes in Switzerland.
  • If the annual audited financial statements of all Swiss resident constituent entities are based on Swiss GAAP FER, they serve as the basis for the QDMTT calculation.
  • The joint liability of all Swiss constituent entities for the MNE groups Pillar Two taxes in Switzerland has been limited to the amount they contributed to the top-up taxation.

Otherwise, the key items of the ordinance can still be summarized as follows:

  • For the material aspects of these new Pillar Two taxes (IIR, UTPR and QDMTT) the ordinance to a large extent directly refers to the GloBE Model Rules of 14. December 2021 (e.g., for the determination of in-scope groups and constituent entities, the calculation of the taxes, etc.).
  • From a procedural point of view, Switzerland applies a one-stop shop approach, whereby in general the canton of residence of the constituent entity theoretically subject to IIR in Switzerland is responsible for the entire groups Swiss Pillar Two tax assessment. In case there is no constituent entity which is subject to IIR the constituent entity with the highest average balance sheet total excluding the book value of participations over the last three years is subject to QDMTT.
  • The administrative regulations of the corporate income tax (CIT) and net equity tax declaration and assessment procedure apply analogously to the Pillar Two taxes.
  • The same is true for the appeals procedure and criminal tax law which also analogously follows the existing CIT regulations. However, there is one deviation in the case of the appeals procedure. The second instance is directly the Swiss Federal Administrative Court.

The Federal Council has full flexibility to update and improve the Pillar Two ordinance if it is in the interest of Switzerland or if unexpected issues arise during its application. In that case, a simple Federal Council decision is sufficient without any binding input from Parliament. This is also true regarding a later application of the IIR and UTPR. The Swiss Federal Council must now propose a draft law on Pillar Two to the Swiss Parliament within six years.

Stay connected for more information as we further analyze this new ordinance for its potential implications on businesses operating in Switzerland.


Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Ltd, Zurich
  • Daniel Gentsch
  • Thomas Semadeni 
  • Alain Horat
Ernst & Young Ltd, Geneva
  • Ioseb Nutsubidze
  • Sarah Drye
Ernst & Young Ltd, St. Gallen
  • Roger Krapf
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.