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What changes for the Swiss VAT in 2018?

What changes for the Swiss VAT in 2018?

The Swiss Federal Council confirmed the entry into force on 1 January 2018 of the amendments to the Swiss VAT Law. Key changes will take place:

The rate of VAT in Switzerland drops

As the 2020 pension vote has not been completed, VAT rates will be reduced from 1 January 2018. The standard VAT rate will thus be reduced by 0.3% to 7.7%, the service rate. 0.1% to 3.7%, while the reduced rate remains unchanged at 2.5%. The Federal Administration has published its practical guidelines on the application of the new VAT rates.

We advise you to pay attention now and to think to adapt, that is to say in particular well update your billing systems and ERP taking into account that:

  • as of January 1, 2018, invoices and contracts will have to be modified to apply the new rates
  • the system needs to be updated to handle transactions both with current and new VAT rates.

The benefit date will have to be determined to know which VAT rate to apply, as opposed to the billing date which is the general tax point under the Swiss VAT Law. If from the end of 2017 you are working on projects that will not be delivered until 2018, do not forget to set up the new VAT rates. In the same way, it is necessary to think about the down payments, the continuous services or the adjustments of price.

January 1, 2018 will arrive very quickly. To avoid unpleasant surprises any company should make sure right now of the good update of the new rates of VAT.


How will foreign companies be taxed?

In order to eliminate the competitive disadvantages facing Swiss companies, the Federal Council partially revised the VAT law. The rules have thus been tightened so that foreign suppliers register and charge Swiss VAT on their supplies in the country. The entry into force will be as of January 1, 2018.

Currently, the VAT registration threshold is a turnover of CHF 100,000 in Switzerland. As of January 1, 2018, the thresholds remain the same, but it will be based on global turnover. A change that should result in the registration of 30,000 additional foreign companies to Swiss VAT.

A foreign company will be exempted from VAT registration in Switzerland if: it delivers only services in Switzerland that are subject to the place of performance of the service, and / or if it provides electricity from gas or heating. All companies are therefore not obliged to register for VAT Switzerland if they sell services in Switzerland or to Swiss customers.

This is why it is important to specify where the implementation of services and goods is - each service provided must be treated differently.


In 2019, further changes for mail order companies

Currently, the VAT legislation subjects mail order companies that deliver goods in Switzerland to the Swiss import tax. The import tax is billed to the customs customer. For economic reasons, the Federal Customs Administration removes the tax burden below 5CHF, corresponding to small shipments (magazines, books, food ...).

From 1 January 2019, if the turnover of the mail-order companies is 100 00 CHF or more, they will be treated as the delivery of domestic goods and will have the tax obligation to pay the VAT in Switzerland.

Correspondence companies must therefore check whether their turnover reaches a minimum of CHF 100,000 in "small shipments" in the last twelve months. It is advisable to observe in 2018 what these small consignments represent in order to foresee the necessary provisions. If the organization reaches the 100,000 CHF threshold, it will be liable for Swiss VAT on all deliveries within the country and the import tax.

The purpose of this amendment is to ensure equality of competition between online providers not established in Switzerland and those who are. As implementation is planned for 2019, the regulations governing it can still be changed.


Other notable changes on January 1, 2018:

  • The VAT rate on e-books, magazines and newspapers will be reduced from 8% to 2.5% to be aligned with that of printed books.
  • The calculation of VAT for sales of works of art and antiques will be changed.
  • Additional services in the field of insurance, such as social security services and vocational training services, will be exempt from Swiss VAT
  • The rules on liability for taxable and non-taxable persons acquiring services from abroad will be clarified.