New VAT rates in Switzerland

Switzerland lowers the VAT for the first time: New standard rate at 7.7%, special hotel rate at 3.7%, reduced rate remains at 2.5%.

2017

The VAT rates are changing in Switzerland – for the first time ever not upwards, but downwards, although probably only for a short time. The standard rate, which also applies to almost all services, will be reduced from 8% to new 7.7%, the special rate for hotels 3.7% (previously 3.8%) and the reduced rate remains unchanged at 2.5%.

Important: The applicable tax rate is determined neither by the date of invoicing nor the payment, but the point in time or the period of service provision.

What does this mean for you?

All services before 01.01.2018 must be invoiced at the old rate, 8%, and all services from 01.01.2018 at the lower rate. For all Findea clients, this means that it is best to settle the old year with an invoice dated 31.12.2017 and then switch the VAT rates. This is by far the easiest and least risky way to deal with the VAT reduction.
Even for fixed-price projects (e.g. with part-payments or progress payments), the portion that was performed up to 31.12.2017 must be invoiced at 8% – it is not permissible, in my opinion, to issue a final invoice in 2018 at 7.7%, which also bills services from 2017. So it is also worthwhile for fixed-price projects to settle accounts as of 31.12.2017 and accordingly contact the clients.
‍Assessing the situation becomes more complicated if a fixed-price project through advances or installment payments is partially or fully "pre-financed". If the project extends beyond the turn of the year, then at least a part is invoiced at 7.7% and in the end, a customer credit remains.

‍Software Adjustments

‍All invoicing programs in which VAT rates are fixedly stored for billing must be adjusted by the end of the year, and depending on the business model, even earlier. Afterwards, a simulation of various types of invoices should ensure that the tax is correctly declared and booked in all cases. Further adjustments might be necessary in the area of booking of incoming invoices.

‍Findea supports you

‍We are happy to support you in discussing, defining, and implementing measures for a smooth transition into the year 2018. Sign up early for a consultation appointment.

If you have any questions, we are of course happy to help. Feel free to contact your account manager.

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