International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Switzerland: VAT rate reductions effective from 2018

intl-updates-small.jpg

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.

suter.jpg

Benno Suter

 

dimitriou.jpg

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

more across site & bottom lb ros

More from across our site

The Brazilian government may be about to align the country’s unique system with OECD standards, but this is a long-awaited TP reform and success is uncertain.
Two months since EU political agreement on pillar two and few member states have made progress on new national laws, but the arrival of OECD technical guidance should quicken the pace. Ralph Cunningham reports.
It’s one of the great ironies of recent history that a populist Republican may have helped make international tax policy more progressive.
Lawmakers have up to 120 days to decide the future of Brazil’s unique transfer pricing rules, but many taxpayers are wary of radical change.
Shell reports profits of £32.2 billion, prompting calls for higher taxes on energy companies, while the IMF warns Australia to raise taxes to sustain public spending.
Governments now have the final OECD guidance on how to implement the 15% global minimum corporate tax rate.
The Indian company, which is contesting the bill, has a family connection to UK Prime Minister Rishi Sunak – whose government has just been hit by a tax scandal.
Developments included calls for tax reform in Malaysia and the US, concerns about the level of the VAT threshold in the UK, Ukraine’s preparations for EU accession, and more.
A steady stream of countries has announced steps towards implementing pillar two, but Korea has got there first. Ralph Cunningham finds out what tax executives should do next.
The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.