Beat Baumgartner, Michiel van Kempen, Laurens Hoek, Julia Ann Nigg
On June 28, 2025, the G7 reached a landmark political agreement that reshapes the international tax landscape. U.S.-parented multinational enterprises (MNEs) would be excluded from the OECD’s Pillar Two Income Inclusion Rule and Undertaxed Profits Rule. Instead, the U.S. tax regime would operate “side-by-side” with Pillar Two, introducing new dynamics for global taxation.
This is relevant for US MNEs operating in the ÈU and Switzerland, as well as for MNEs investing in the U.S. Companies in these jurisdictions must navigate increased compliance obligations and potential competitive distortions. The G7 agreement raised fundamental questions about legal consistency, the future of coordinated tax implementation, and the risk of an uneven playing field. Each of these elements is assessed in detail from a Swiss and EU tax perspective in this article, which was published in December and thus prior to the publication of the comprehensive package for a “side by side” arrangement announced 5 January 2026.
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