The smart way to start a business

Newsletter abonnieren


Blog

Changes in the VAT rates

Since 2011 a percentage of additional financing has been deducted from each VAT rate and assigned to the disability insurance fund. As at 31 December 2017 this temporary increase in VAT is going to be abolished. If the 2020 pension scheme reform were adopted, the tax rate would be directly increased once again. However, since this reform has been rejected by both the people and the cantons, for the first time in its history VAT is going to be reduced. This will entail some changes. In addition, as at 1 January 2018 the net tax rate will also be adjusted.

 

Current VAT Rates

Switzerland knows three different VAT rates: the normal rate (currently at 8.0%), the special rate for the hospitality industry (currently at 3.8%) and the reduced rate (currently at 2.5%). In 2011 both the people and the cantons agreed to increase these rates to these levels in order to provide extra financing for the disabled pension fund. For the normal rate the increase amounted to 0.4 percentage points, for the special rate 0.2 percentage points and for the reduced rate 0.1 percentage points.

VAT Rate Development

The portions of the tax rates used for the extra financing of the disabled pension fund are limited in time. As at 1 January 2018 this temporary increase will be cancelled, but at the same time another increase will also be made, namely each VAT rate will be increased by 0.1 percentage points. Decided by the sovereign on 9 February 2014, this increase is meant to help finance the expansion of the railway infrastructure. If the 2020 pension scheme reform had been adopted on 24 September 2017, no reduction would ensue. With the reform in place, the VAT rates would have been directly increased to the current levels once again. As the reform was rejected, however, now VAT is going to fall down for the first time since its introduction. Then the VAT rates will be adjusted as follows:

Normal Rate Special Rate Reduced Rate
Current VAT rates 8.00% 3.80% 2.50%
./. expiring share in the additional financing of the disabled pension fund (as at 31 Dec 2017) -0.40% -0.20% -0.10%
+ additional share in the expansion of the railway infrastructure (as at 1 Jan 2018) 0.10% 0.10% 0.10%
As at 1 Jan 2018 7.70% 3.70% 2.50%

 

Consequences for Small and Medium-Sized Companies

The VAT adjustments may mean quite an effort for small and medium-sized companies. It might be so, for example, as far as bookkeeping software is concerned. Depending on the software vendor and the product, it is possible that all adjustments will be made with a single update. For some small and medium-sized companies it means, however, that e.g. the VAT rates will have to be adjusted manually, and namely in all affected invoice templates or Excel tables.

Net Tax Rate Reductions

Net tax rates are meant to make clearings with the Swiss Tax Administration easier. When net tax rates are used, no input tax has to be determined. Instead a gross amount, which is inclusive of taxes, is multiplied by a net tax rate approved by the Swiss Tax Administration. This possibility is available only to companies with a turnover of up to 5.02 million Swiss francs. Specific net tax rates are defined for each industry or type of activity, and are specified in the Net Tax Rate Regulation. Now these rates are going to be adjusted. Eight out of the ten existing rates are going to be reduced.

Rates to Date Rates from 1 Jan 2018
0.1% 0.1%
0.6% 0.6%
1.3% 1.2%
2.1% 2.0%
2.9% 2.8%
3.7% 3.5%
4.4% 4.3%
5.2% 5.1%
6.1% 5.9%
6.7% 6.5%

 

Which industries exactly are affected can be read in the preprint copy of the new Regulation.

Findea can help you keep your taxes in an easy and hassle-free manner.

» Taxation
» Foundation Platform

New comment

Your email address will not be published. Required fields are marked *