Clarity on Swiss Taxes 2025: Navigating Global Minimum Tax and Trade Challenges

Many countries pressed ahead with implementation of Pillar Two in 2025, with corresponding regulations now in force in around 50 countries, including Switzerland. However, some key jurisdictions – like the US – have yet to adopt minimum taxation.

Against this background, trade tensions under the current US administration are evolving – and ushering in a new era of global commerce. Is the stability of the OECD’s global tax initiative in jeopardy? And how will US initiatives shape the future of trade?

At the cantonal level, it seems sensible to press ahead with subsidies or incentives that boost business location attractiveness through targeted support, particularly in research, production, training and decarbonization.

At the federal level, Switzerland may wish to revisit policies and measures deemed non-tariff barriers to trade. Although the contours of the recent trade packages are not yet finalized, it is clear that the US government is taking an increasingly assertive trade agenda.

"As taxation, tariffs and geopolitical developments collide on the global stage, let’s hope for the best – but expect the unexpected."

Stefan Kuhn
Partner, Head of Tax & Legal

Clarity on Swiss Taxes

Expect the unexpected

Download the insights

What to expect

1. Trade and Tariffs: How Switzerland is navigating new global tax challenges

Global trade, Swiss made
Switzerland's economic and free trade agreements (FTAs)
Opportunities for business

2. Global minimum tax in Switzerland in 2025: progress, uncertainties and US influences

Implementation in Switzerland
Implementation in other countries
Scenario planning: How can Switzerland prepare for global tax and trade distortions

3. Swiss corporate taxation in 2025: A competitive analysis of a changing world

4. Swiss income tax in 2025: Stability in the midst of global shifts

Trade and Tariffs: How Switzerland is navigating new global tax challenges

As trade tensions under the current US administration evolve, a new era of global commerce unfolds.

Although the contours of the recent trade packages are not yet finalized, it is clear that the ongoing trade confrontations have hammered global growth forecasts, prompting the International Monetary Fund to revise its 2025 growth forecast downward to 2.8% – 0.5% lower than predicted in January.

The Swiss government predicts that Switzerland too will see below-average growth in 2025 and 2026.

Swiss exposure

Tariffs

Switzerland still levies significant tariffs on the importation of agricultural products from any country, including the US. These tariffs are accompanied by a sophisticated regime of importation licenses and quotas.

Switzerland also imposes excise duties on tobacco, beer and alcohol. In addition, passenger cars are subject to 4% vehicle tax upon importation.

Furthermore, Switzerland applies environmental levies, including a tariff on volatile organic compounds and a levy on CO2 emissions.

Non-tariff barriers to trade

Despite widespread criticism of the US justifications for reciprocal tariffs, it is worth revisiting some of Switzerland’s non-tariff trade barriers. The US administration defines non-tariff barriers to trade as any government-imposed measure or policy or non-monetary barrier that restricts, prevents, or impedes international trade in goods.

These include technical barriers to trade, lack of intellectual property protection, tolerated anti-competitive conduct and government procurement.

Find out more about the circumstances in Switzerland

Global trade, Swiss made

Switzerland offers businesses distinct advantages. Its central location in Europe ensures strategic access to key markets, while a stable political, legal and economic environment supports planning certainty.

A highly skilled, multilingual workforce is developed through a dual education system that combines vocational schooling with practical training. Switzerland also cultivates a world-class innovation ecosystem, particularly in sectors such as pharmaceuticals and precision machinery. Global connectivity is supported by two international airports and an efficient rail network.

The regulatory framework favors business, characterized by limited bureaucracy and a competitive, internationally recognized tax system. Switzerland’s strong financial sector, longstanding neutrality and global reputation further enhance its attractiveness for investment.

Export and import goods

Swiss export highlights include high-value goods such as machinery and mechanical appliances, chemicals, pharmaceuticals, precision instruments and watches.

Major imports include raw materials, electronics, machinery, chemicals, food and textiles. Trade in services, including financial services, technology and tourism, is significant and in many instances covered by special agreements.

Switzerland's economic and free trade agreements (FTAs)

The SECO FTA Index valued imports covered by FTAs at a total of CHF 62.328 billion in 2023, associated with tariff savings of CHF 2.226 billion.

It is estimated that there were nonachieved tariff savings of CHF 546 million, i.e. potential duty reductions that Swiss companies could have claimed under FTAs but did not.

The Swiss economy and free trade agreements (FTA)

Overview free-trade agreements worldwide

> Click on the image to enlarge it

Opportunities for business

Short term

In the short term, businesses will need to navigate new tariffs, especially on products destined for the US market, as well as US-sourced goods intended for China, Canada and potentially the EU.

The extent to which prices rise, or profit margins shrink, will depend on each product’s price elasticity and on the competitive landscape in the destination markets – specifically, whether domestic producers can match both the quality and supply capacity of the imported goods.
Midterm

In the midterm, the tariff regime may present sector-specific arbitrage opportunities, particularly in tariff-sensitive goods like semiconductors, aluminum and steel. One potential strategy to mitigate exposure to tariffs on these goods is shifting the production origin, for example by moving a final value-adding step to a lower-tariff jurisdiction.
Long term

Long term, businesses will need to reassess their global strategy, adjusting how they rebalance risks and leverage opportunities within their international global supply chains. The principle of “produced where sold” may well prevail as a guiding framework in the face of intensifying economic rivalries among the world’s largest economies.

China and the US

While China and the US continue to grapple with steel export bottlenecks, an opportunity arises for an emerging Swiss market for galvanizing steel manufacturing.

Prior to the onset of the tariff tensions, China was a popular destination for steel galvanization.

Global minimum tax in Switzerland in 2025: Progress, uncertainties and US influences

Minimum taxation is not a minimum standard, but a common approach. This means that while countries are not obliged to introduce measures or regulations, they should do so in accordance with the rules if they do decide to do so.

Jurisdictions should then accept the application of the corresponding rules by other countries.

Implementation in Switzerland

Switzerland already introduced minimum taxation as a qualified domestic minimum top-up tax (QDMTT) on 1 January 2024. On 4 September 2024, the Federal Council passed a resolution to also implement an international top-up tax under the income inclusion rule (IIR) with effect as of 1 January 2025.

In contrast, there are no plans for the time being to introduce the undertaxed payment rule (UTPR), a secondary international top-up tax.

On 29 January 2025, the Federal Council initiated a consultation to obtain approval for the Multilateral Competent Authority Agreement on the Exchange of GloBE Information.

This agreement should make it easier for the multinational corporate groups concerned to meet the requirements to provide information in the context of minimum taxation, by allowing the relevant information to be submitted centrally in a single jurisdiction in the future.

Besides the new top-up tax at federal level (which is assessed by the cantons), some cantons have adjusted their tax rates in light of global minimum taxation.

Our publication provides insight into the varying behaviours of the cantons

Implementation in other countries

Of the more than 130 countries that agreed to the OECD/G20’s two-pillar project, more than 50 have so far introduced certain minimum taxation rules, or will do so from 2025.

In major jurisdictions such as China and India, it remains uncertain whether and when certain minimum tax rules will be introduced. The US has voiced opposition to adoption.

Long-term enforcement of the global minimum tax hinges on whether such key jurisdictions will participate in these measures in the foreseeable future. Until then, multinational enterprises may fall outside the scope of minimum taxation as long as their business activities are limited to these countries and no UTPR is applied.

Introduction 2024

Since 2024, countries such as Brazil, Gibraltar, Guernsey, Indonesia, Kenya, Portugal and Singapore have joined the list.

Pillar Two – global overview

> Click on the image to enlarge it

Scenario planning: How can Switzerland prepare for global tax and trade distortions

Due to various ongoing developments at the international level, particularly in the area of minimum taxation and in connection with the United States specifically, Switzerland should remain as flexible as possible.

With regard to minimum taxation, it is important that Switzerland’s Federal Council maintain a high degree of flexibility in implementing the Ordinance on the Minimum Taxation of Large Corporate Groups, which is based directly on the constitution. For example, the Federal Council should continue to monitor UTPR developments, even though the prevailing uncertainty in this regard implies that introduction of the UTPR should be avoided for now.

Further developments around the QDMTT and IIR, both of which have already been introduced, should also be observed – in particular, the question of whether there are (an increasing number of) structures designed to restrict minimum taxation.

For inbound structures, it remains to be seen whether it is (still) necessary to levy the QDMTT to prevent another country from levying taxes.

For outbound structures, the question arises as to whether it is necessary to levy IIR to avoid taxation by another country.

In practicing flexibility, the Federal Council should be guided by the arguments already expressed in the context of the referendum on minimum taxation in June 2023, namely that (i) taxes that Switzerland can otherwise collect should not be levied by other countries and (ii) that Switzerland should implement minimum taxation in a manner that is consistent with or qualifies for OECD rules.

Should a scenario arise in which minimum taxation continues to be applied in Europe, but not for US-domiciled groups (and potentially those with a presence in Asia), the possibility of Switzerland levying a conditional, reciprocal (domestic and international) top-up tax should be examined.

Swiss corporate taxation in 2025: A competitive analysis of a changing world

The average income tax rates in Switzerland fell slightly compared to the prior year, from 14.60% to 14.40%. With a tax rate of 11.85%, the canton of Zug continues to offer the most attractive income tax rates in a cantonal comparison. The cantons of Bern, Zurich and Valais continue to lead the pack, followed by Basel-Landschaft and Basel-Stadt.

For 2025, the canton of Ticino recorded the largest reduction – 3.11 percentage points – while the canton of Basel-Landschaft saw a decrease of 2.45 percentage points.

Both of these reductions are attributable to TRAF, and complete the tax rate cuts in Switzerland under the reform. In contrast, the canton of Vaud increased its tax rate by up to 0.72 percentage points. This increase should be viewed in light of global minimum taxation.

In a European comparison, the cantons of Central Switzerland remain competitive, even outperforming low-tax countries such as Ireland and Cyprus. In 2025, various Northern, Western and Southern European countries continue to lead ahead of other European countries.

Globally, traditional offshore domiciles remain the most attractive in terms of tax rates.

Corporate income tax rates in the cantons 2025

> Click on the image to enlarge it

More information on corporate taxation

Swiss income tax in 2025: Stability in the midst of global shifts

Average tax rates for individuals in Switzerland changed by 0.2% on average in Switzerland compared to prior years.

With a tax rate of 22.59%, Schwyz has the most attractive income taxes in 2025 in a cantonal comparison. The cantons of western Switzerland are once again the uncontested frontrunners. Geneva’s 1.70% reduction in the tax rate for 2025 comes as a surprise.

The cantons of Central Switzerland remain competitive in a European comparison and continue to hold their own against low-tax havens such as Jersey and the Isle of Man. In 2025, Scandinavian countries are once again top of the tax table in a comparison with other European countries.

Conversely, many Eastern European countries have drastically reduced their tax rates over the last decade by introducing flat 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.