Switzerland Provides Guidance on Integrity Rule and Adoption of Side-by-Side Package

In preparation for the first Swiss QDMTT tax return, due by 30 June 2026, Switzerland has issued a practice note detailing the application of the Integrity Rule. Additionally, Switzerland has confirmed that it will apply the Side-by-Side Package, including all associated election rights, without restriction.

On 15 January 2025, the OECD published administrative guidance on the Integrity Rule related to the minimum taxation of large multinational enterprises, addressing certain tax measures. This guidance could have an impact to tax benefits in some Swiss cantons. The Integrity Rule allows for a two-year transition period (2024–2025) for the cantonal tax benefit addressed. During the transition, companies’ utilisation of these cantonal tax incentives will be subject to limitations. According to the Minimum Taxation Ordinance, these administrative guidelines apply in principle immediately to the Swiss domestic minimum top-up tax (“QDMTT”).

Pending Motions

Prior to Christmas 2025, the Swiss Parliament passed two motions (25.4392 and 25.4399) instructing the Federal Council to apply these administrative guidelines only to tax benefits granted on or after 1 January 2025. The Federal Council is tasked with amending the Minimum Taxation Ordinance accordingly. This political process requires the Federal Council to conduct a public consultation and, based on the feedback received, decide whether and how to implement the motions. A final decision is not expected before autumn 2026.
Given that Swiss subsidiaries of affected groups must file their 2024 QDMTT tax returns by 30 June 2026, questions have arisen regarding how to address these pending motions in the interim.

Practice Note

The Swiss Federal Tax Administration (“SFTA”) has issued a clarifying practice note concerning the upcoming first QDMTT return. It states that groups must apply the Integrity Rule in their tax returns. If the Integrity Rule results in a reduction of the GloBE tax rate and consequently triggers a top-up tax, this must be explicitly declared in the QDMTT return. The cantonal tax administrations responsible for assessing the QDMTT have been instructed to withhold issuing any assessments until the Federal Council reaches a final decision.

Side-by-Side Package Enactment

In addition, the SFTA announced in a second practice note that the following safe harbour rules from the Side-by-Side Package are immediately applicable and thus adopted and enacted under the provisions of the Minimum Taxation Ordinance:

• Extension of the temporary CbCR safe harbour;
• Substance-based Tax Incentive Safe Harbour (effective 1 January 2026);
• Side-by-Side Safe Harbour and UPE Safe Harbour (effective for fiscal years beginning on or after 1 January 2026);
• Simplified ETR Safe Harbour (effective for fiscal years beginning on or after 1 January 2026).
  

Deloitte’s View

Through the practice note, the SFTA provides legal certainty on how affected groups should complete the 2024 QDMTT tax return due by 30 June 2026. Should the Federal Council decide that the Integrity Rule does not apply to the 2024 fiscal year, the cantonal tax administrations will be required to reflect this in their assessments. Furthermore, the SFTA has confirmed that Switzerland will implement the Side-by-Side Package in full, including all election rights, without restriction.