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

In September 2022, Swiss voters approved an increase in value added tax. This in order to “support” AHV (state old-age and survivors' insurance) for the next 10 years.

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

As of January 1, 2024, the following net tax rates apply:

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

1st application:

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The applicable tax rate is determined neither by the date of invoicing nor of payment, but by the date of provision of services.

Services provided up to December 31, 2023 are subject to “old” tax rates. From

January 1, 2024 provided services at the “new” tax rates. Even with periodic services such as subscriptions, the period of service provision is decisive.

examples:

1. Mr. Meier concludes a purchase contract for a cabinet on November 27, 2023. 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 delivery date, i.e. December 22, 2022, is decisive for the application of the correct tax rate, i.e. the “old” tax rate of 7.7%.
   

2. Ms. Müller will sign up for Glückspost on July 5, 2023. This applies from
   From July 2023 to June 2024, she pays the full amount for one year at the time of ordering and receives the first issue of the lucky mail a day later.
   Ms. Müller must be charged for this subscription as follows:

• 6 months (July to December 2023) i.e. 50% of the amount paid for 2023 with a tax rate of 7.7% and
• 6 months (January to June 2024) i.e. 50% of the amount paid for 2024 with a tax rate of 8.1%

2. Invoicing

If various services provided in 2023 as well as in 2024 are shown on the same invoice, these must be listed separately with the separate tax rate. If you do not want or cannot do this, all benefits must be charged or shown at the new, higher tax rates.

Partial payments are charged at the tax rate that will be valid at the time of service provision and/or delivery.

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 receives an invoice for an advance payment, which he must pay by the end of November 2023 (to confirm the order). Since the kitchen will only be delivered in 2024, the advance invoices issued in 2023 must be offset at the “new” tax rate of 8.1%.

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3. Reductions in remuneration

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Does the recipient pay a benefit received in 2023 only in 2024 and draws a 2% discount

From, this cash discount is posted and declared at the “old” tax rate.

Returns of items or cancellations of contracts must be booked and declared as reductions in remuneration at the applicable tax rate at the time the service is provided.

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4. Sales bonuses

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Annual bonuses or other discount payments will be paid out in 2024, but relate to benefits from 2023, which must be booked and declared at the “old” tax rates (as reductions in pay).

5. Procedure

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It is recommended that all work or deliveries already carried out be billed or invoiced by the end of December 2023, even if orders have not yet been completed.

For contracts that have already been concluded, which extend beyond the end of 2023, a written adjustment should be made regarding the “new” tax rates applicable after January 1, 2024.

6th declaration

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

If delivery is delayed (in 2024 instead of 2023) and is charged at the old tax rate, the invoice must be corrected.

Therefore, if an invoice must be amended which was erroneously issued at 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 2023. The tax office requires that transactions previously declared at the “new” tax rate should be declared with the “old” tax rate for the time being. These must then be corrected in the third quarter of 2023.

example:
The following are the declarations of a turnover of CHF 1,000 net, which was paid in the 2nd quarter of 2023; however, the service will only be provided in 2024 (e.g. sale of a car that will only be delivered in 2024, but an advance must be paid when ordering in April 2023).

In the 2nd quarter, this turnover is declared as follows:

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

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

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

Point 303 on the left side below 8.1%: CHF 1,000/CHF 81

Exceptions/Specials

If it is not possible to determine with certainty when the service will be provided because the recipient can decide so, the time of sale will exceptionally determine the tax rate (e.g. multi-trip tickets, car wash cards, 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.

Only the time of provision of the service is relevant for the declaration of subscription tax (i.e. not the payment date and not the invoice date).

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Review your company's procedures early on. If you have any questions about this topic, our specialized team will be happy to answer them. Talk to us about it!

Source:

FTA VAT info 19

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