What is it all about?
VAT rates will be increased in Switzerland from 1 January 2024. This increase is the result of the vote held on 25 September 2022 on the “Federal decree on additional AHV financing through an increase in value-added tax”. This article provides you with information on the new VAT rates and the necessary adjustments.
New VAT rates from 2024
The following table shows the new VAT rates applicable from 1 January 2024:
The standard rate applies to all services that are not subject to the reduced or special rates. The reduced rate is used for products such as food, plant seeds, fertilisers, medicines, magazines and other articles.
Special scenarios and settlements over different time periods
Delimitation in time
If services are provided that extend over periods with different tax rates, it is necessary to show them separately on the invoice. Let’s assume that you carry out work at the customer’s premises that is completed on 15 December 2023 and will not be completed until 20 January 2024. In this case, the two periods on the invoice must be shown separately. In our example, this means:
- All services provided from 15 December 2023 to 31 December 2023 are subject to the VAT rate of 7.7%.
- All services provided from 1 January 2024 to 20 January 2024 are subject to the VAT rate of 8.1%.
Partial invoices
If you are involved in a project and have agreements for payments by means of partial invoices with the client, the time respectively the period of performance of the service is also decisive in this case.
The Swiss Federal Tax Administration recommends, in particular for orders that have not yet been completed by the end of 2023 and run into 2024, partial invoices should already be precisely assigned to a period. You should specify in detail the nature, subject matter, scope and time (or period) of performance of the service rendered.
Advance payments
If you obtain a service in 2024 but are already invoiced in 2023, the following applies:
In this case, the new VAT rate of 8.1% will apply. Irrespective of whether the invoice is already issued and/or due in 2023, the actual provision of services will not take place until the new billing period (2024), for which the new tax rate of 8.1% applies.
Service contracts and subscriptions
If you offer service subscriptions or conclude service contracts with your customers that cover the transition from the old to the new billing period, you must divide the fees pro rata temporis. “Pro rata temporis” means the allocation of the amount to the respective periods at the corresponding VAT rates.
Example: Service subscription 12 months, 1600.-
Returns of goods or cancellation of services
Imagine you provided a service or sold goods in 2023 and billed them at the old tax rates. Your customer now asks for a refund or returns the goods in 2024, when the new tax rates will already apply. In such a case, the time of service provision is still decisive, so the reimbursement is made applying the VAT rates of the previous accounting period.
