Increase in tax and VAT rates in Switzerland from January 1, 2024

In September 2022, the Swiss electorate approved an increase in VAT rates. This to the AHV (state old age and survivors' insurance) for the next

10 years to «support».

The following VAT rates will therefore apply from January 1, 2024:

The following net tax rates apply from January 1, 2024:

Only the tax rates of 0.1% and 0.6% will not be increased.

Application:

Neither the date of invoicing nor the date of payment are decisive for the tax rate to be applied, but rather the time at which the service is rendered.

Services rendered up to December 31, 2023 are subject to the “old” tax rates. Services rendered from January 1, 2024 are subject to the "new" tax rates. Even with periodic services such as subscriptions, the period of service provision is crucial.

Examples:

1. On November 27, 2023, Mr. Meier concludes a purchase contract for a cupboard. The furniture store will deliver this cabinet to him on December 22, 2023. The invoice will be dated/ Issued January 12, 2024. Mr. Meier pays the invoice on January 30, 2024. The decisive factor for the application of the correct tax rate is the delivery date, i.e. December 22, 2022, so the "old" tax rate of 7.7% is to be applied.

2. On July 5, 2023, Ms. Müller takes out a subscription to the Glückspost. This applies from July 2023 to June 2024. She pays the entire amount for one year at the time of ordering and receives the first issue of Glückspost a day later.

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This subscription must be billed to Ms. Müller as follows:

• 6 months (July to December 2023) i.e. 50% of the amount paid for the year 2023 with the tax rate of 7.7% and

• 6 months (January to June 2024) i.e. 50% of the amount paid for the year 2024 with the tax rate of 8.1%

Invoicing

If different services, which are provided in 2023 and 2024, are shown on the same invoice, they must be listed separately with the separate tax rate. If you don't want to or can't do that, all services must be offset or reported with the new, higher tax rates.

Partial payments will be offset against the tax rate that will be valid at the time the service is provided and/or the delivery is made.

Example:

Mr. Müller buys a fitted kitchen on November 15, 2023, which will be delivered and installed in February 2024. Two days after placing the order, Mr. Müller will receive an invoice for an advance payment, which he must pay by the end of November 2023 (to confirm the order). Since the kitchen will not be delivered until 2024, the advance invoices issued in 2023 must be offset against the "new" tax rate of 8.1%.

Reductions in remuneration

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If the recipient only pays for a service received in 2023 in 2024 and receives a 2% discount from, this discount will be booked and declared with the "old" tax rate.

Returns of items or cancellation of contracts must be booked and declared as a reduction in payment at the applicable tax rate at the time the service is rendered.

Sales bonuses

Annual bonuses or other discount payments will be paid out in 2024, but relate to services from 2023. These must be booked and declared at the "old" tax rates (as reductions in remuneration).

Procedure

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It is recommended to invoice all work or deliveries already carried out by the end of December 2023, even for orders that have not yet been completed.

In the case of contracts that have already been concluded and extend beyond the end of 2023, a written adjustment should be made regarding the “new” tax rates to be applied after January 1, 2024.

Declaration

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In the case of construction work, the time of performance applies when work is being carried out on the building and not prefabrication work in the workshop.

In the event of late delivery (in 2024 instead of 2023) and offsetting with the old tax rate, the invoice must be corrected.  

Therefore, if an invoice has to be changed that was incorrectly issued with the "old" tax rate and is now corrected with the "new" tax rate (thus recalculating the missing VAT), this can also be claimed as input tax.

The "new" tax rates can only be declared from the 3rd quarterly statement of 2023. The tax office prescribes that the sales that have already been declared at the “new” tax rate should initially be declared with the “old” one. These must then be corrected in the third quarter of 2023.

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Example:

Below are the declarations of a turnover of CHF 1,000 net, which was paid in the second quarter of 2023; however, the service will only be provided in 2024 (e.g. sale of a car which will not be delivered until 2024, but an advance payment must be made if the order is placed in April 2023).

In the second quarter, this turnover is declared as follows:

Item 302 on the right below 7.7%: CHF 1,000 / CHF 77

In the third quarter, this turnover is adjusted as follows:

Item 302 on the right below 7.7%: - CHF 1,000 / - CHF 77 (as minus amounts)

Item 303 on the left under 8.1%: CHF 1,000 / CHF 81

Exceptions/Special

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If the sale cannot be determined with certainty when the service will be provided because the recipient can decide this, the time of sale will exceptionally determine the tax rate (e.g. multi-journey tickets, car wash tickets, etc.).

The night in a hotel or New Year's Eve party, which takes place on December 31, 2023, will be charged and declared at the "old" tax rate.

Also for the declaration of the purchase tax, only the time of the service provision is relevant (i.e. not the payment and not the invoice date).

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Check the procedure in your company at an early stage. If you have any questions on this subject, our specialized team is at your disposal. Talk to us about it!

Source: ESTV MWST-Info 19

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