Adjustment of value-added tax rates as of January 1, 2024.

With the vote on “AHV 21” on 25.09.2022 for the rehabilitation of the Old Age and Survivors Insurance, the value-added tax rates (hereinafter VAT rates) are expected to increase effective 01.01.2024. What does this mean for the Swiss population?

Value-Added Tax Rates

The Federal Tax Administration is expected to adjust the VAT rates effective 01.01.2024 as follows:

                                                  Previously                 Adjustment              New

Standard Rate                            7.7%                     +0.4%                        8.1%

Reduced Rate                   2.5%                    +0.1%                         2.6%

Special Rate                             3.7%                    +0.1%                         3.8%

Life will thus become a little more expensive in practically all areas. Here are a few examples:

The purchase of clothing, electronics, etc. or the use of services (standard rate) for 100 francs will become 40 centimes more expensive. The purchase of medication and food (reduced rate) for 100 francs will become 10 centimes more expensive. An overnight stay in a hotel (special rate) for 100 francs will also become 10 centimes more expensive.

What companies need to consider:

For companies, there is a bit more to consider than for consumers. When the VAT changes, accounting software and product prices must be adjusted.

Furthermore, at the turn of the year, it must be observed which tax rate is to be used. Neither the invoice date nor the payment date is decisive. What matters is the time or period of the service provision. Services rendered until 31.12.2023 are subject to the previous rates, and services rendered from 01.01.2024 are subject to the new tax rates.

Periodic services that are paid for a year in advance, such as subscriptions, must be split. If a service is provided from July to July, 6 months will be billed at the previous rate and 6 months at the new tax rate.