SWITZERLAND Trends and Developments Contributed by: René Matteotti, Manuel Ulrich, Gregor Steiner and Natalja Ezzaini, Tax Partner AG
(Qualified Refundable Tax Credits – QRTC) and direct payments. At the time of writing, initial cantonal regu - lations have already been adopted in Basel-Stadt, Graubünden and Zug, whilst Lucerne is in the leg - islative process and other cantons such as Geneva, Schaffhausen, St. Gallen and Zurich are discussing corresponding models. The regulations of the cantons of Basel-Stadt, Graubünden, Lucerne and Zug reveal a largely similar institutional structure. It is generally the relevant eco - nomic development office rather than the tax authority that is responsible for assessing and approving appli - cations. Applications must be submitted in the year following the respective financial year, with the sub - mission deadline falling between three and six months after the end of the financial year, depending on the canton, and cannot be extended. Legally, the new support instruments are usually regu - lated in separate economic development laws rather than in the cantonal tax laws. Whilst the canton of Graubünden provides exclusively for refundable tax credits, other cantons offer both refundable tax cred - its and direct payments. The incentives are typically based on a percentage of certain costs, such as per - sonnel expenses in the field of research and develop - ment. For direct payments, the cantons generally set a limited annual funding budget, and contributions will be reduced proportionally if the total amount of appli - cations exceeds this budget. Potential for conflict With existing Swiss incentive measures The introduction of the OECD minimum tax has sig - nificant implications for existing tax incentive schemes in Switzerland. Tax incentives that previously reduced the tax base for corporate income tax – such as the patent box or the additional deduction for research and development expenditure – as well as instruments that allow for partial or full tax exemption (so-called tax holidays) are increasingly losing their effectiveness for large MNE groups. At the same time, the relative attractiveness of direct government support measures could increase – for example, in the form of subsidies or so-called refundable tax credits. In the long term, this could lead to a shift away from indirect tax incen - tives towards direct government support, thereby cre -
ating new conflicts of interest in terms of tax policy and the economy. Differing accounting standards Potential conflicts also arise from differing accounting standards. Whilst the tax base in Switzerland is closely aligned with financial statements prepared in accord - ance with the Swiss Code of Obligations (OR), inter - national accounting standards such as Swiss GAAP FER, IFRS or US GAAP may lead to differing results. These differences relate, among other things, to the valuation of assets, the recognition of provisions or the treatment of deferred taxes. This creates a tension between national tax regulations and internationally applied accounting standards. In the context of Pil - lar Two, a financial statement following OR standards does not qualify as a “qualified financial statement”. “Side-by-side system” A further area of conflict may arise from the introduc - tion or application of a so-called side-by-side system for Pillar Two. Under this system, different tax regimes are recognised as comparable to the Pillar Two GloBE system, to ensure a minimum taxation and exist in parallel. This raises questions regarding the equal treatment of companies and individual countries, and also calls into question, at least in part, the integrity of the rules on the global minimum tax. Latest Court Decisions In May 2025, the Swiss Federal Supreme Court ruled on the taxation of employee share schemes involving a change of residence, addressing the vesting period and the proportional taxation of benefits earned dur - ing periods of work in both Switzerland and Spain. The Court determined that the benefits acquired up to 16 August 2018 could be taxed in Switzerland based on the work performed there. The Court also dealt with two other complex cases: one regarding hidden profit distributions involving multinational loans, and another concerning offshore fund management fees, where the lack of operational infrastructure led to tax evasion concerns in Switzerland. The rulings high - lighted the importance of determining the substance of transactions for tax purposes.
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