VAT rates increased in Switzerland on January 1, 2024. Companies need to take stock of the situation straight away in order to prepare and to make the right changes to their ERP and accounting systems.
Why have VAT rates increased in Switzerland?
This increase in VAT rates is intended to ensure the sustainability of the Swiss tax system, by adapting it to the constantly evolving economic ecosystem.
Switzerland is currently working on a reform of its Old-Age and Survivors’ Insurance (“OASI”, the first pillar of the Swiss pension system). Following a referendum in September 2022, the Swiss people voted in favor of an increase in VAT rates to finance the OASI.
The Federal Council set January 1, 2024 as the date when this reform, known as OASI 21, would come into force. Since that date, VAT rates have been as follows:
| Previous rates (valid up to December 31, 2023) | New rates (effective from January 1, 2024) | |
| Standard rate | 7.7% | 8.1% |
| Reduced rate | 2.5% | 2.6% |
| Special rate | 3.7% | 3.8% |
🚨 Note that certain services invoiced in 2023 must already apply the new VAT rates.
How to determine the VAT rate
Regardless of the VAT rate, the VAT liability is recognized when the service is invoiced or paid for.
In Switzerland, there are three types of VAT rate:
- Standard rate: applied to most goods and services.
- Reduced rate: applied to certain categories of goods, such as foodstuffs, newspapers, books, and medical services.
- Special rate: applied to accommodation services.
To determine whether the service provided is subject to the old or the new rate, you should take into account the date on which the service was provided or performed rather than the invoice or payment date.
Generally speaking, services performed up to December 31, 2023 are subject to the old rates, and those performed on or after January 1, 2024 are subject to the new rates.
How to calculate VAT on recurring services
In the case of recurring services, the change in VAT rates may affect your accounting as early as 2023, for example for the following services:
- Annual or long-term contracts
- Season tickets (including Swiss Federal Railways “SBB” passes)
Although these are long-term services, they will be considered as being performed in two different annual periods, each of which will have to be invoiced at the applicable rate.
Example: if your company entered into an annual maintenance contract on June 1, 2023, the invoice will have to be split over 2023 and 2024 at the two applicable rates.
🚨 If the invoice does not clearly indicate the performance dates and the applicable rates, the entire service will be subject to the highest VAT rate.
We recommend that you pay particular attention to services invoiced in 2023, but covering 2023 and 2024. For effective VAT management, you will need to categorize these services in order to determine the applicable rate.
Changing VAT rates in Switzerland: how to manage your accounting
Changes in VAT rates have a direct impact on companies’ accounting and financial management.
At N2F, we recommend that you update your accounting systems (ERP, invoicing system) and check your first VAT returns carefully to ensure that they are compliant with the new rates.
If you use N2F to manage your expense reports, then there’s no need to panic: the product has been updated to include the new rates. The smart scan recognizes the rate specified on the receipt or invoice, and the injection into the accounting system is always automatic.
Note that these changes concern the corporate net tax debt rate and acquisition tax as well as VAT rates.
Want to find out more? Our experts are here to help! 👇
