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VAT and social insurance: changes for 2020

VAT and social insurance: changes for 2020

In this article, we sum up the most important changes to take into consideration in 2020. Especially, the implementation of the Federal Act on Tax Reform and AHV Financing which affects taxes and payroll management.




The end of paper declarations

If until now the choice was left to taxpayers to declare on paper or online; as of January 1, 2020, electronic submission will be mandatory (unless exceptional circumstances).


NGO: Law changes in relation to grants and donations

The qualification of grants and donations does not change, but the right to recover the withholding tax (deductible VAT) has changed in July 2019.

In general, prior to this change, donations were not considered as revenue at the product level (no VAT to pay) and were excluded from revenue. From now on, with this change as part of the recovery of the withholding tax, we can initially process the grant (double assignment) and then integrate donations.

If the donation is still tax-free, it can now be considered as a product in the constitution of the entire revenue, which increases the panel of what falls within the tax field.

If an organization has a lot of revenue from donations from individuals, it will increase the volume of revenue, decrease grants and increase the right to withholding tax.


For example, an NGO has a turnover of CHF 50,000 of consulting, CHF 30,000 of grants and CHF 20,000 of donations, today the NGO will be subject to taxes.

For an organization that relies solely on donations and grants not exceeding CHF 100,000; unlike before; this may bring a new tax advantage to voluntarily subject itself in order to assert the right to withholding tax.


More information on the Federal Council website and in the dedicated file.


TRAF 2020

Decrease in company tax

We mentioned in this article that the Federal Act on Tax Reform and AHV Financing (TRAF) will be implemented as from January 1, 2010. The Council has recently approved three ordinances that will apply from this date:

  • Patent ordinance (reduction of tax on profits from patents and similar rights)
  • The deduction of notional interests (tax deduction for equity financing by legal entities)
  • The withholding source tax credit ordinance (amendment to the lump sum tax credit ordinance).

More information on this website.


Increase in social charges

Tax adjustments for businesses and individuals as well as supplements to the financing of old-age and survivors' insurance (AVS) will also be applied from 1 January 1, 2020.

The social security contribution rate (AVS) will increase by 0.3%. This is the first increase in AHV (AVS) contributions in more than 40 years. Employers’ and employees’ contribution rates will increase by 0.15% each. Regarding payroll management, the AHV / DI / IC insurance rates will be 5.275% for employees and 5.275% for employers.

In the canton of Geneva, the reform of company tax also validated a contribution on childcare and childcare to increase the capacity of reception. This contribution, borne by employers, amounts to 0.07% of the wage bill and is subject to the deduction of family allowances (FA).



Equal Pay law

In order to improve the implementation of the principle of equal pay for women and men, an ordinance on the verification and analysis of equal pay, as well as two new articles (13a to 13i, 17a and 17b Equal Pay law) will be implemented as from January 1, 2020 for employers of at least 100 employees.

They will have to:

  • Analyze or outsource the analyze of equal pay;
  • Make sure, in the following year, that this analysis has been formally conducted;
  • Inform employees and shareholders of the results of the analysis, the year following this audit, if this is a listed company.