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Current VAT Rates in Switzerland
Switzerland operates a tiered VAT rate system. In 2023, the standard VAT rate in Switzerland is 7.7%. However, there are reduced VAT rates applicable to specific goods and services. The reduced rate is 2.5% for essential items such as food, water, books, and pharmaceutical products. Certain services such as accommodation, cultural events, and public transportation may also be subject to the reduced rate. Additionally, there is a special rate of 3.7% for hotel accommodation services.
VAT Rates in Switzerland for 2024
As from 1 January 2024, the following new VAT rates will be applicable in Switzerland (including Municipality of Liechtenstein) :
- New standard rate: 8.1% (+0.4)
- New reduced rate: 2.6% (+0.1)
- New accommodation rate: 3.8% (+0.1)
Partial payments for supplies rendered before 31 December 2023 are subject to the current VAT rates and can be invoiced under the current rates. Similarly, partial payments for supplies rendered as of 1 January 2024 must be invoiced with the new VAT rates (note that the SFTA has announced that the Q3 2023 VAT return form will already cater for the new rates).
When to apply new VAT Rates in Switzerland for 2024?
You need to consider the new VAT rates already in 2023 for bills and invoices for which the service is spilling over into 2024. For example, let's say you receive an invoice in August 2023 for 1,200 CHF which has a VAT of 7.7% for a 1 year service that will end in July 2024. For the period of August - December 2023, you need to apply the VAT rate of 7.7% and for the period of January - July 2024 you need to apply the VAT rate of 8.1%. In this case, you take 1,200 / 12 months to get 100 CHF per month. For August - December 2023, your rate is (100 x 5 months) x 7.7% which equals 38.50 CHF of input VAT. For the period January - July 2024, your rate is (100 x 7 months) x 8.1% which equals 56.70 CHF of input VAT.
This also applies to output VAT when invoicing customers for a service that will spill into 2024. Be sure to split the amounts for 2024 to include the new VAT rate of 8.1%.
Who pays this new Swiss VAT rate?
Businesses that reach or exceed an annual turnover of CHF 100,000 must register for Swiss VAT. Voluntary registration is also possible if the annual turnover is below this threshold. Non-resident businesses providing taxable supplies in Switzerland are required to register for VAT regardless of their turnover. Registration can be done through the Federal Tax Administration (FTA), either online or by completing the relevant forms.
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