Clarity on Swiss Taxes

The process of implementing global minimum tax under BEPS 2.0/Pillar 2 continues alongside ongoing developments. Around 60 countries have already introduced corresponding regulations.

This includes Switzerland, where the qualified domestic minimum top-up tax (QDMTT) and income inclusion rule (IIR) have been implemented as core elements. At the same time, new developments are changing international framework conditions – in particular the side-by-side approach pursued by the US and new Administrative Guidance issued by the OECD.

For Switzerland, then, the question is not just one of technical implementation, but of how to remain attractive as a business location. Several cantons are already responding with tax rate adjustments, QRTCs and other incentives, particularly in the area of research and development (R&D). Qualified tax incentives (QTIs) are also growing in importance as substance-based tax incentives may receive more favorable treatment under Pillar 2.

As conditional top-up taxes are not allowed, Switzerland will have to continuously re-evaluate whether the benefits of securing tax revenues in the country through the QDMTT outweigh the need to protect its position as a competitive tax location, especially compared to the US.

"Resilience and the courage to adapt remain essential in the face of uncertainty."

Stefan Kuhn
Partner, Head of Tax & Legal

Clarity on Swiss Taxes

Finding a balance – Switzerland weighs up its options in this time of transition

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What to expect

1. The changing shape of minimum taxation

Implementation of minimum taxation
Cantonal measures to boost business locations
Global minimum tax evolves
Impact on the attractiveness of Switzerland as a business location

2. Swiss corporate tax rates in 2026

3. Swiss income tax rates in 2026

The changing shape of minimum taxation

Implementation of global minimum tax

In Switzerland

Switzerland introduced the qualified domestic minimum top-up tax (QDMTT) as of 1 January 2024, followed by the international income inclusion rule (IIR) as of 1 January 2025. There are no current plans to adopt the undertaxed payment rule (UTPR). Switzerland is also a signatory of the GIR MCAA, enabling the global exchange of information for the purposes of the Globe Information Return (GIR).

The first local supplementary tax returns must be submitted by 30 June 2026. Only then will a clear picture emerge of how much revenue is generated from top-up taxes and available to fund the cantons’ local policy measures.

Several cantons have adjusted their corporate income tax rates toward the global minimum tax of 15%; doing so also reduces any applicable top-up taxes.

In other countries

Around 60 countries have already implemented Pillar 2 or are introducing corresponding rules with effect as of 2025/2026. New countries include Israel, Montenegro and Nigeria.

Major economies such as China and India have yet to implement global minimum tax, however. The US has rejected Pillar 2 and is instead pursuing a side-by-side approach. Global minimum taxation will remain fragmented as long as major economic regions do not participate in full.

Learn more about global trade

Pillar Two – global overview

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Cantonal measures to boost business locations

Multiple cantons responded with measures such as QRTCs, subsidies or innovation grants to safeguard their attractiveness in a world of global minimum tax.

Grisons, Basel-Stadt, Zug, Lucerne and Schaffhausen have been particularly proactive, with efforts focusing on R&D, innovation, sustainability, investment and jobs. Many models are designed to be flexible as further OECD guidance is expected.

Global minimum tax evolves

The US and OECD Inclusive Framework agreed a safe harbor under the side-by-side approach. This essentially means that US groups are exempt from the OECD rules (IIR/UTPR) but any local QDMTT continues to apply.

As a result, the situation is asymmetrical: not all major economic areas are subject to the same rules, which skews international tax competition.

The OECD is strengthening substance-based tax incentives, especially those that promote investment, jobs and R&D. Such qualified tax incentives (QTIs) are treated more favorably than traditional tax relief instruments.

QTIs can reduce the effective tax burden without automatically triggering a top-up tax. As a result, tax competition remains possible as long as it is linked to economic substance.

Switzerland adopts the OECD Administrative Guidance on a dynamic basis via the Minimum Taxation Ordinance. As a result, the Side-by-Side Package also applies directly in Switzerland.

This practice is, however, controversial in political circles. Parliamentary motions have been adopted calling for greater legal certainty and fewer retroactive effects.

The SFTA has nevertheless confirmed application of the new rules for 2024 tax returns, provided no changes are made to the Minium Taxation Ordinance. A consultation procedure has been launched.

Impact on the attractiveness of Switzerland as a business location

As conditional top-up taxes are not permitted under the OECD rules, Switzerland needs to weigh up its options. The country should either apply the QDMTT consistently and, in doing so, secure related tax revenues in Switzerland, or not apply it and increase the tax attractiveness of the country for certain groups, especially US MNEs.

QTIs also offer new possibilities. The additional R&D deduction in particular could be made even more attractive from a tax perspective and used in a targeted manner.

There is a risk that the Side-by-Side System could trigger relocations away from Switzerland. Companies may explore options to move their activities or even invert to the US to benefit from more favorable rules.

This may lead to a loss of tax revenues and economic substance in Switzerland.

Switzerland should retain both the QDMTT and IIR in order to protect tax revenues. At the same time, it is important to monitor international developments closely and remain flexible if necessary.

Targeted use of QTIs, QRTCs and grants – especially to promote R&D – will be key. As minimum taxation is governed by an ordinance, Switzerland can adapt swiftly to international developments and take targeted measures to strengthen its attractiveness as a business location.

Swiss corporate tax rates in 2026: Analysis of competition in a changing world

Average corporate income tax rates in Switzerland have increased slightly compared to the previous year, from 14.40 to 14.43%. With a tax rate of 11.66%, the canton of Lucerne now offers the most attractive income tax rates of any canton. The canton of Bern once again occupies the top spot in terms of tax rates, followed by Zurich and Valais. There were isolated (modest) tax rate reductions in the cantons of Aargau, Jura, Lucerne, Schwyz and Zug, while the canton of Basel-Stadt raised its tax rate (on higher profits) by 1.49 percentage points. This increase should be viewed in light of global minimum taxation. There were smaller tax rate increases in Glarus and Solothurn.

In a European comparison, the cantons of Central Switzerland remain competitive, even outperforming low-tax countries such as Ireland and Cyprus, which raised its tax rate from 12.5% to 15%. Various countries in Northern, Western and Southern Europea feature once again among the frontrunners in 2026, with no major changes observed in European countries. Lithuania has raised its tax rate by one percentage point.

More information on corporate taxation

Globally, traditional offshore domiciles remain the most attractive in terms of tax rates and the year-on-year comparison shows a largely stable picture overall: corporate income tax rates have changed only marginally, with the exception of South Korea, where the rate was raised by one percentage point.

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Swiss income tax rates in 2026 Stability amid global shifts

Average tax rates for individuals in Switzerland have changed by around 0.1 percentage point on average compared with previous years.

With a tax rate of 21.9%, Zug has the most attractive income tax rate among cantonal capitals in 2026. The cities of Geneva and Basel continue to have the highest tax rates.

The cantons of Central Switzerland remain competitive in a European comparison, offering the lowest tax rates in the whole of Western Europe. As in previous years, the highest tax rates in Europe can be found in Scandinavia in 2026. In contrast, many Eastern European countries continue to have very low tax rates.

In a global comparison, the traditional offshore domiciles and Singapore retain their leading position in terms of attractive tax rates.

The income tax rates for natural persons in Switzerland and abroad are generally stable.