What You Need to Know
Changes to the Value-Added Tax in 2024
With the approval of the Swiss electorate on September 25, 2022, Switzerland has paved the way for additional funding for the Old Age and Survivors' Insurance (AHV). To generate these additional funds, the value-added tax (hereinafter referred to as VAT) will be increased, with the new rates coming into effect on January 1, 2024.
New VAT rates from 2024: An overview
The new VAT rates are as follows:
| Previous until 12/31/2023 |
New from 1/1/2024 |
|
|---|---|---|
| Standard rate | 7.7% | 8.1% |
| Reduced rate | 2.5% | 2.6% |
| Special rate for accommodation | 3.7% | 3.8% |
When should the new rates be applied?
The application of the correct VAT rates depends on the time of service provision, not the date of invoice or payment. Services provided up to 12/31/2023 are subject to the old VAT rates; for services from 01/01/2024, the new rates must be applied.
For services spanning the end of the year, a pro-rata allocation of costs is required. This also applies to prepayments and deposits. Invoices must clearly indicate which services were provided in which period to avoid misunderstandings. If this is not evident and verifiable, legislation requires that the entire amount must be billed with the new VAT rates.
Practical example for illustration
A good example of this is the monthly IT service of a company valued at CHF 12,000.00 (excluding VAT), which is invoiced on July 25, 2023, for a service period from 08/01/2023 to 07/31/2024.
The breakdown is as follows:
- CHF 5’000.00 (for 5 months) with 7.7% VAT: CHF 385.00
- CHF 7’000.00 (for 7 months) with 8.1% VAT: CHF 567.00
The invoice would thus show two items:
- Service from 08/01/2023 – 12/31/2023: CHF 5’385.00 incl. VAT
- Service from 01/01/2024 – 07/31/2024: CHF 7’567.00 incl. VAT
Total amount: CHF 12’952.00 incl. VAT
The increased VAT rates also apply to import tax and acquisition tax.
Balance and flat tax rates
Due to the VAT increase, the balance and flat tax rates will be increased as follows:
| Balance and flat tax rates until 12/31/2023 |
Balance and flat tax rates from 1/1/2024 |
|---|---|
| 0.1% | 0.1% |
| 0.6% | 0.6% |
| 1.2% | 1.3% |
| 2.0% | 2.1% |
| 2.8% | 3.0% |
| 3.5% | 3.7% |
| 4.3% | 4.5% |
| 5.1% | 5.3% |
| 5.9% | 6.2% |
| 6.5% | 6.8% |
The service period is also here the relevant factor for the application of the tax rates.
As a result of the tax rate increase, the turnover limits and tax liability for the application of the balance tax rate method will also be increased accordingly.
| Turnover limit until 12/31/2023 |
Turnover limit from 1/1/2024 |
|
|---|---|---|
| Turnover limit* | CHF 5'005'000 | CHF 5'024'000 |
| Tax liability* | CHF 103'000 | CHF 108'000 |
* for the application of the balance tax rate method
Recommendations from Tarantino Treuhand
To be prepared for the upcoming changes, we recommend:
- Implementing the new VAT rates in cash registers and software systems now.
- Considering the new rates when issuing invoices and quotes.
Contact
If you have any questions or uncertainties, we are at your disposal.
Tarantino Treuhand AG
Britta Sieber
+41 (0) 43 499 00 29
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