The Swiss population rejected the 2020 Old-Age and Survivors
Insurance reform on September 24 2017. As a result, the
additional funding of disability insurance (DI) by 0.4 points
of VAT will expire at the end of 2017. However, the standard
and special VAT rates will increase by 0.1 point from January 1
2018 due to the draft measures to finance and develop railway
infrastructure.
Switzerland's current VAT rates will decrease from 8% to
7.7% (standard rate) and from 3.8% to 3.7% (special rate) on
January 1 2018. The reduced rate of 2.5% will remain
unchanged.
The Federal Tax Administration already published practical
guidelines regarding the reductions (e.g. invoicing, down
payments, leasing contracts, new net tax debt rates and flat
rates). The guidelines also include the new VAT return forms
that take both the current and new rates into account.
What does this mean for the VAT payer?
Any change in the VAT rates will require adaptation of
invoicing and enterprise resource planning (ERP) systems, in
particular:
- Invoices, contracts, etc. will need to be
amended to reflect the new rates as from January 1 2018;
- Additional tax codes will have to be
created in the ERP system to manage transactions under the
current VAT rates and the new rates;
- The tax point of transactions (i.e. the
date of supply) will need to be carefully determined to
determine the applicable VAT rate. This is especially
important for continuous services, down payments and price
adjustments/credit notes;
- Account will need to be taken of specific
rules that apply to certain sectors. For example, for hotels,
the current special VAT rate will be applicable to
accommodations and catering services provided on New Year's
Eve, but a pro-rata rate will have to be used for
arrangements concluded for the period straddling 2017 and
2018; and
- The new VAT return form may require
internal compliance teams to adapt their VAT compliance
processes.
Businesses should review their positions as soon as possible
to ensure they are prepared for the new rules.
|
Benno Suter |
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|
Constant Dimitriou |
Benno Suter (bsuter@deloitte.ch) and
Constant Dimitriou (cdimitriou@deloitte.ch)
Deloitte
Tel: +41 58 279 6366 and +41 58 279 8077
Website: www.deloitte.ch