New VAT rates in Switzerland form January 1st, 2018

This is to inform you that counting from January 1st, 2018 new VAT rates will apply in Switzerland.

The modification of the VAT rates is the result, on the one hand, of the refusal of the Swiss population of a new financing of retirement program proposed by the government and, on the other hand, of the end of the actual financing program of the disability insurance supported by 0.4 percentage point of VAT. However, at the same time, the new Swiss VAT rate will support by 0.1 percentage point the financing program of the railway infrastructure until 2030.

Therefore, counting from January 1st, 2018 the following new VAT rates will apply:

 

Standard rate

Special rate

Reduced rate

Current rates

8,0 %

3,8 %

2,5 %

-  End of the financing program of the disability insurance by December 31, 2017

-0,4 %

-0,2 %

-0,1 %

+ New financing program of the railway infrastructure

(from January 1st, 2018 until December 31, 2030)

+0,1 %

+0,1 %

+0,1 %

New rates counting from January 1st, 2018

7,7 %

3,7 %

2,5 %

 

 

 

 

 

 

 

 

 

Impact on the VAT rates invoiced

Please note that the moment or the period of delivery of good or service is decisive for the tax rate. This means that all goods and services delivered until December 31, 2017 shall be invoiced with the old VAT rates. The goods and services delivered counting from January 1st, 2018 shall be invoiced with the new VAT rates.

Please be aware that if provisions of goods or services are partly taxable at the old rates and partly at the new rates due to the period during which they were provided and are listed on the same invoice, the invoice shall disclose separately the dates or periods of delivery of goods or services and the proportion of the amount of the provisions of goods or services for each of the periods. If it is not the case, all provision of goods or services invoiced shall be declared in the VAT return at the old rates.

Example 1

On November 27, 2017, House Furniture SA concludes a contract with customer X to provide a wardrobe. The wardrobe is delivered on December 22, 2017 to the domicile of the customer X. The invoice is established on January 12, 2018. One week later, the customer X pays the invoice. The relevant date for determining whether the old or new rate is the date of delivery (December 22, 2017). Consequently, House Furniture SA shall invoice at the rate of 8% and declares it in the first quarter VAT return of 2018.

Example 2

Deco SA, interior design company provides interior work in the house of a customer from December 11, 2017 until January 30, 2018. The invoice totaling CHF 35 000 is established on 15 February 2018 by Deco SA and paid on 5 April 2018 by the customer. The invoice mentions separately the work provided from December 11, 2017 until December 31, 2017, amounting to CHF 20’000 (8% VAT included), and the work provided from January 1st, 2018 until January 31, 2018, amounting to CHF 15’000 (7.7% VAT included). Since the invoice is established in February 2018, turnover and taxes shall be declared in the first quarter VAT return of 2018.

The principles mentioned above can be summarized as follows:

 

 

 

 

 

 

 

 

 

 

RSM Switzerland would be pleased to provide with you more details on the above should you need more information.

Contact : Daniel Spitz, Head of Tax, Certified tax expert, daniel.spitz@rsmch.ch, 0041 21 311 00 53