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Switzerland: revised VAT regulation and reduced VAT rate come into force

 

The Swiss  Value Added Tax (VAT) rate has been reduced since January 1, 2018.

In particular, the standard VAT has decreased to 7.7%, while the special VAT rate for hotels has fallen to 3.7%. The reduced rate of 2.5% – that applies to everyday consumer goods such as foodstuffs, non-alcoholic beverages, books, newspapers, magazines, medicines and also to tickets for sports and cultural events –  has not been changed. The change has prompted business owners and taxable persons to swiftly update tariffs, documents and invoices to reflect the change in the VAT rate. The rate was temporarily increased by 0.4% in 2011 to allow funding for disability welfare, but has reverted to the previous rate of 7.7% after the proposal of extending the extra revenue to fund the pension system has been dismissed in the September 2017 referendum.  

In September, as Goldblum and Partners reported, Switzerland had also approved several amendments to the VAT regulation. They have also become effective from January 1.

Since that date, foreign companies providing services in Switzerland are automatically liable to pay VAT on all of their turnovers – the previous norms established VAT was due only over a turnover of CHF 100,000. The new rules have the clear intent of removing competitive disadvantages for Swiss businesses against foreign companies.

Mail-order businesses will have more time to implement the changes – as they will be liable to VAT if their turnover from import-tax-free consignments is above CHF 100,000, however, only from 2019. The VAT will be charged to customers who, in turn, will not be due to pay import fees or levies.