OECD GloBE Rules (Pillar Two): What Follows The First Taxation Decisions?

1 Introduction

With the filing deadline of the 2024 Swiss QDMTT return having ended on 30 June 2026, the first assessments from the relevant cantonal tax authorities will arrive in taxpayers' electronic mailboxes any time soon.

The GloBE Model Rules are extensive, complex and often subject to interpretation. Taxpayers may therefore wish to have disputed positions reviewed by a court in formal legal proceedings. The following summarizes the most relevant aspects of GloBE (Pillar Two) related proceedings in Switzerland.

 2 What’s Next?

As the Federal Minimum Taxation Ordinance itself could not be contested, there have been no Swiss court rulings on GloBE (Pillar Two) matters yet. Legal proceedings can therefore only be initiated regarding specific tax assessment decisions. With issuance of the first tax assessment decisions regarding the 2024 fiscal year, first proceedings may soon be initiated.

If a taxpayer does not agree with the QDMTT assessment decision of the competent Swiss tax authorities, they may file an objection with said authority within 30 days of receiving the QDMTT assessment. Unlike the electronic submission procedure applicable for the QDMTT return filing, the objection must be submitted in writing. Objection proceedings are free of charge.

If the cantonal tax authorities have issued a duly substantiated assessment decision, the taxpayer may appeal directly with the Swiss Federal Administrative Court, provided that the cantonal tax authority and the Swiss Federal Tax Administration (SFTA) consent (Sprungbeschwerde).

Note that taxpayers and cantonal tax authorities will not have to deal (yet) with the income inclusion rule (IIR) in the 2024 fiscal year due to its implementation only as of 1 January 2025. However, the procedural considerations regarding the QDMTT apply equally to the IIR. Furthermore, as its name suggests, the Global Information Return mainly serves informational purposes and therefore no assessment is issued by the SFTA which could be contested.

 3 Continuation of Legal Proceedings

The decision issued by the cantonal assessment authority for the top-up tax following the objection may be appealed to the Swiss Federal Administrative Court by the taxpayer, the cantonal authority for the administration of the top-up tax and the Swiss Federal Tax Administration within 30 days. The (at least partially) unsuccessful party may in turn appeal the decision of the Swiss Federal Administrative Court to the Swiss Federal Supreme Court as court of last instance within 30 days after the Swiss Federal Administrative Court hands down its decision.

 4 Substantive Grounds

In objection and appeal proceedings at cantonal and federal administrative court level, the taxpayer may challenge both the incorrect application of the law (such as double taxation treaties, the constitution, federal law incl. the Minimum Taxation Ordinance, or the GloBE Model Rules) as well as incorrect or incomplete determination of the facts relevant to the case. By contrast, while it can fully review the legal merits of the Swiss Federal Administrative Court's decision, the Swiss Federal Supreme Court has only very limited authority to review the facts of the case.

A possible complaint may refer to the incorrect application of the Minimum Taxation Ordinance and, by reference, the GloBE Model Rules, which apply through direct reference in the Minimum Taxation Ordinance. A taxpayer may also raise the Minimum Taxation Ordinance's compliance with the Swiss Federal Constitution, such as with the principle of the rule of law, which sets high standards for references of Swiss laws to soft-law regulations of intergovernmental organisations such as the OECD.

We expect that the Swiss tax authorities will place particular scrutiny on the qualification of deferred tax assets (articles 9.1.1–9.1.3 GloBE Model Rules). Besides the avoidance rules in articles 9.1.2 and 9.1.3 GloBE Model Rules, which the competent cantonal tax authority will apply in case of any reversals of deferred tax assets, article 9.1.1 GloBE Model Rules requires that deferred tax assets be reflected in reporting packages or stand-alone accounts, or disclosed in the notes to consolidated financial statements, whereas the Commentary to the GloBE Model Rules, requires neither. How the competent cantonal tax authority will navigate this discrepancy remains to be seen.

A much-debated issue with Switzerland’s approach of referring to the GloBE Model Rules in its Minimum Taxation Ordinance is whether provisions in the Commentary to the GloBE Model Rules that conflict with the GloBE Model Rules or even introduce new rules would, in principle, first have to be incorporated in the Minimum Taxation Ordinance in order to be applicable. However, this has not (yet) happened in some cases, and it remains to be seen how the courts will rule on such matters.

The above is likewise relevant for Swiss Constituent Entities of US headquartered groups. The Side-by-Side agreement (which applies in any case only for the tax years as of 2026) does not exempt Swiss Constituent Entities from its Swiss QDMTT obligations.

It also remains to be seen what role the international accounting standards will play. The correct application of international accounting standards should regularly need to be answered as preliminary question, as international accounting standards form the basis of the QDMTT calculations. 

 5 Summary

The GloBE Model Rules are complex and its text is open to interpretation. The first assessments of the competent tax authorities will be handed down shortly and taxpayers may want to subject them to judicial scrutiny. A taxpayer may want to appeal contested positions already in the first QDMTT assessment to have clarity for future tax periods and to avoid (factually) prejudicing future tax assessments.

Legal Notice: The information contained in this Smart Insight newsletter is of a general nature and does not constitute legal advice.