Switzerland

Electronic process for VAT registrations and VAT returns  Switzerland’s plans to introduce new VAT rates in 2024 are accelerating, but these are not the only changes forecast for what is projected to be a congested January 2024 with respect to its fiscal calendar.   Alongside new tax rates, the Swiss Federal Council is acceleration the automation of its fiscal procedures, by mandating that VAT registrations and VAT returns must be submitted electronically from 1 January 2024.  This obligation builds on an already strong electronic culture in the country, where most VAT returns are submitted electronically, therefore signalling Switzerland’s firm intention to cement this within its legislative framework.  

Further guidance on new VAT rates As 1 January 2024 nears in Switzerland, which heralds the introduction of new VAT rates, the country is also accelerating its material to aid taxpayers in a smooth transition to the new VAT rates.   The Federal Council in Switzerland has produced some material which aids taxpayers in the usage of the new rates, specifically relating to the declaration of the VAT rates.  Further information can be found via the Federal Tax Administration (FTA).  You can also read about Kofax’s plans to accommodate the upcoming VAT rates on our dedicated country-specific page here.  

VAT return modifications to accommodate new tax rates The overhaul of a country’s VAT rates is a significant fiscal measure, and the decision to enact such a measure is often influenced by economic, social, and political factors. Switzerland’s VAT rate changes, projected for 1 January 2024, were triggered by social agendas that fuelled the need for change in Switzerland’s fiscal framework. You can read about the expected VAT changes in Switzerland and the underlying motivations for the change in our recent post here. Tax changes are, however, just one component within a much broader fiscal infrastructure, and the Swiss government will need to enact several other changes to accommodate the new VAT rates. One of these adjustments is the modification to the Swiss periodic VAT return to take account of the new rates. The ‘old’ rates (i.e. those that apply prior to 1 January 2024, and which are currently in use) may still be required- and so the VAT return will continue to incorporate these rates, alongside the new rates which come into existence from 1 January 2024. Tungsten Network will support the VAT rate changes in Switzerland scheduled for 1 January 2024. Cognizant of the fact that the VAT rates which are currently in use and which will be replaced by new VAT rates will still be required- for example, when raising credit notes- our solution will also contain both pre and post 1 January 2024 tax rates to accommodate our Swiss market.

Revised VAT rates – further guidelines Tungsten is mindful of the upcoming VAT rate changes in Switzerland, expected in January 2024.  While the VAT rate change may appear superficially straightforward, there are more practical and complex considerations that come with the introduction of new tax changes, such as when VAT rate are to be applied, etc.   The Swiss government has published a comprehensive publication including information relating to the application of the new VAT rates, which can be accessed here.  

While the VAT rate change may appear superficially straightforward, there are more practical and complex considerations that come with the introduction of new tax changes, such as when VAT rate are to be applied, etc.  

The Swiss government has published a comprehensive publication including information relating to the application of the new VAT rates, which can be accessed here.  

Confirmation of new tax rates Tungsten has previously communicated on the upcoming proposed Swiss VAT rate increases expected in 2024.   Switzerland has now confirmed new VAT rates in the country in line with the following:  Normal rate 7.7% to 8.1%  Reduced rate: 2.5% to 2.6%  Special rate for accommodation services: 3.7% to 3.8%  These will be effective from 1 January 2024.   Switzerland is a compliant territory for Tungsten, and we will support the new rates in the country once effective.  

VAT rate increase We recently communicated that Swiss government were intending to increase VAT rates in the country, for the reasons outlined here. The Swiss government has now confirmed the change in VAT rates in line with the following:

• Standard VAT rate from 7.7% to 8.1%
• Reduced VAT rate from 2.5% to 2.6%
• Special rate for accommodation services 3.7% to 3.8%

The increase will come into effect on 1 January 2024. Further information around the VAT rate increase is expected from the Swiss tax authorities before the implementation of the change.

Proposed VAT rate increase We previously communicated that Switzerland is proposing to increase its VAT rates. To this effect, Switzerland will hold a further referendum to determine whether the VAT rate increase will be implemented. Tungsten Network is monitoring any tax rates changes in Switzerland. Switzerland is a compliant market at Tungsten and our solution will support any new tax rates introduced by the Swiss government.

Anticipated increase in VAT rates A few months ago, we oversaw Poland applying greater autonomy to determine their own VAT rates. More recently in Switzerland, we can see how the economic measures a country enacts can have a significant effect on the VAT rates a country deploys. In December 2021, the Swiss Parliament approved the AHV (Old Age and Survivors Insurance) 2021 reform. The measure aims to maintain AHV benefits- but this will come at a cost. Specifically, to meet additional costs for this measure, an increase in the VAT rates has been proposed. The VAT rate increases are expected in line with the following:

• Standard rate: from 7.7% to 8.1%
• Reduced rate: from 2.5% to 2.6%
• Rate for accommodation: from 3.7% to 3.8%

A referendum is expected in autumn 2022 to approve these rates. If approved, these are expected to take place in 2023. Tungsten Network will monitor any new tax rates, if approved, in Switzerland and ensure these are implemented as part of our portal solution.