New VAT rates in Switzerland from 1 January 2024

VAT rates in Switzerland have undergone major changes, with businesses and consumers having to comply with the new tax rules from 1 January 2024. The country is famous for its developed banking infrastructure and extensive use of e-commerce. This is particularly noticeable in the data, where up to 90% of the population regularly purchases online. Additionally, Switzerland is ranked first in the UN Trade and Development’s B2C E-commerce Index, highlighting the importance of this industry to the country’s economy. With the introduction of new VAT regulations, e-commerce companies need to react quickly and adapt to changing tax requirements to avoid potential problems and maintain their competitiveness in the market.

Background and reasons for changing VAT rates in Switzerland

Switzerland, known for its strong financial system, decided to change VAT rates in the face of growing demographic challenges and an underfunded public pension system. A vote on 25 September 2022 led to an increase in VAT rates to increase funding for the Swiss pension system.

New VAT rates from 2024 and the products covered by them

From 1 January 2024, the following rates apply in Switzerland:

• The standard VAT rate increased from 7.7% to 8.1%.
• The reduced VAT rate increased from 2.5% to 2.6%.
• The special VAT rate for hospitality services increased from 3.7% to 3.8%.

The standard VAT rate applies to most products sold online and other products not covered by reduced rates.

In contrast, the reduced VAT rate applies to products such as:

• food (except alcohol),
• cattle, poultry, fish,
• seeds, live plants, cut flowers,
• cereals, animal feed, fertilizers,
• medicines,
• services of radio and television companies.

Application of the new VAT rates

It is worth remembering that it is the date of supply that determines the application of VAT rates, not the date of invoice or payment. Supplies made up to 31 December 2023 are therefore subject to the old rates, while supplies from 1 January 2024 onwards are already subject to the new VAT rates in Switzerland.

Special attention should also be paid to long-term contracts for regular supplies of goods or services. If such a contract has been signed for a period covering, for example, 2023 – 2025, it will be necessary to update the VAT rates for 2024 and 2025 in the contract.

Summary

For e-commerce sellers operating in the Swiss market, now is the time to adjust to the new VAT rates, which take effect from 1 January 2024. These changes include increases in the standard and reduced rates, as well as a special rate for hospitality services. It is imperative to quickly adjust your pricing strategy and sales systems to avoid unforeseen costs and ensure compliance with current tax regulations. Additionally, in the context of these changes, it is recommended that businesses operating in the Swiss market consult with experts to verify the VAT rates applied. Such a consultation can help avoid potential misunderstandings and ensure proper tax compliance: Contact us – amavat ®.

With amavat ®, you can focus on running your e-commerce business, confident that all accounting and tax matters will be properly taken care of. Our expertise and experience allows you to take care of your finances, giving you peace of mind and time to do what you do best – grow your business!

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amavat^® Team

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