Change in Swiss VAT rates on 1.1.2018
The implications of the VAT change in Switzerland on 01.01.2018
Briefly: All sales or services that took place before 1.1.2018 must be invoiced at the old rate even if the invoice is sent after 1.1.2018.
If you follow the effective VAT model, which is the usual model, the rate of 8% becomes 7.7%, the rate of 3.8% becomes 3.7% and the rate of 2.5% does not change.
If you follow the net model, which you can only use after making a specific request to the federal authority, your VAT rate most certainly changes, find the rates table below.
As the text published by the federal administration is complicated, find below a simple explanation of this change and the implications in your work. Practical examples are given for a faster understanding.
If you have questions or need help with a specific case, follow the instructions at the end of the article or write a comment under this article or on our Facebook page.
Change of VAT rates in Switzerland - in detail
The reason for the change in VAT rates in Switzerland
You probably remember that in 2011, VAT increased from 7.6% to 8%. The reason, which almost everyone forgot, was a specific financing of the AI (disability insurance) by the VAT. As this financing was only planned for a short period, it expired on 31.12.2017. So the rates had to go down.
Another vote meanwhile reserved 0.1% for rail infrastructure since 01.01.2018
However, the reform of the old-age pension system provided for the remaining amounts to be taken so as not to change VAT rates. This would have simplified the lives of persons liable to the VAT. As this reform was rejected by the people during the votes of 24 September 2017, the rates will decrease.
Now let's look in detail at how rates will change.
The rate change
VAT rates in Switzerland change on 01.01.2018.
VAT actual mode (usual method)
Standard rate (- 0.3%)
Reduced rate (not changing)
VAT mode net rates according to the following table.
It is neither the date of the invoice nor the date of payment that determines the tax rate to be applied, but the delivery of the service or product.
Choose the old or new VAT rate correctly
There are two cases that need to be clearly explained:
1. You receive an invoice and you have to enter it in your accounting.
2. You issue an invoice (or bill of sale, receipt, return, etc.) and must choose which VAT rate to enter on it.
If you receive an invoice:
The VAT rate on the document is once. If someone sends you an invoice with the rate 8%, you can use this rate in your accounting for VAT refund.
If you send an invoice (or receipt):
For services or sales up to and including 31.12.2017, you use the old rates regardless of when you send or date the invoice.
For all services or sales from 01.01.2018 inclusive, you use the new rates regardless of when you send or date the invoice.
Let us make some examples to better understand this concept which is far from being easy in practice.
Simplify your life with EZYcount for your accounting.
New with link to your bank account!
a) John sells a vase to Paul on 16.12.2017 for 95.- The old rate of 8% must be written on the receipt or ticket.
b) John sells a similar vase to Mary on 7.1.2018 for 95.- The new rate of 7.7% must be written on the ticket.
c) Paul, consultant in Lausanne, finished a two-month mandate on 21.12.2017 for Dumoulin SA. He sends the invoice on 27.12.2017. It uses the old VAT rate of 8% on the invoice.
d) Hervé sends the logos he designed for Nouvelle Sàrl on 14.02.2018. He sends the invoice a few days later with the new VAT rate 7.7%.
e) Invoice or ticket issued in 2017 with new rates: Paul places an order with Jean for a vase worth 125.- on 14.12.2017. Paul can pick up the vase from 10.01.2018. Jean cashes the vase with his cash register at the new rate of 7.7%.
f) Invoice or ticket issued in 2018 with old rate: Paul, consultant, finished a mandate on 16.12.2017 for the company Services Internet Sàrl. He is busy at the end of the year holidays and sends the invoice after his return to the office on 7.01.2018. He must use the old rate of 8%.
g) Invoice or ticket with two rates: Miriam is independent and has several clients in French-speaking Switzerland. She helps the Dumoulin SA department to improve the recruitment system. The contract runs from 01.11.2017 until 31.03.2018. After successfully completing the improvement of the recruitment system, she records the hours spent on the project. It must distinguish between hours in 2017 and hours in 2018. The hours in 2017 are invoiced at the old VAT rate of 8%. The hours in 2018 are invoiced with the new VAT rate of 7.7%.
h) Advance payment: Eric creates websites for his clients. He asks for an advance of 15% before starting a project. Mathieu asks Eric to make a website on 25.11.2017. Eric agrees to deliver the site at the end of February 2018. Eric has the possibility, but not the obligation, to analyse which works he will carry out before and after 01.01.2018. It uses the old rate for work before 01.01.2018 and the new rate for benefits after 01.01.2018. He also has the option to invoice the entire advance payment with the old rate of 8%.
(i) Discount and reduction: The discount or reduction must take the VAT rate from the invoice. John sends an invoice on 18.12.2017 for 1'000.- to Mary with the old VAT rate 8%, payable 90 days. Mary calls John on 24.01.2018 because the goods do not have the quality Mary expected. Jean decides to make a gesture and offers a 10% discount. He sends a credit note of 100 to Mary dated 24.01.2018 with the old VAT rate of 8%.
j) Bonuses: Lucie is a craftswoman and makes handmade metal decorations. Hubert has a craft shop in Geneva. He buys Lucie's decorations to sell. They have an agreement where Hubert receives on March 31 of each year, a 5% bonus (without VAT) relating to the turnover of the last 12 months realized with Lucie. Lucie therefore sends on 31.03.2018 a credit note to be used on a future order. Hubert's order value from 1.4.2017 to 31.12.2017 is 20'000.- and the order value from 1.1.2018 to 31.03.2018 is 8'000.-. Lucie sends an invoice with 2 positions. The first for a value of 20'000 - + 8% VAT and the second for a value of 8'000 - + 7.7% VAT.
k) Returns: Returns must use the same rate as the invoice. Arnaud sends an invoice of 4'000 to Miriam for a wooden table with 4 chairs. He uses the old VAT rate of 8% because he delivered the furniture on 5.11.2017. On 4.3.2018, Arnaud receives a telephone from Miriam. A chair has a manufacturing defect. They decide together that the return of the chair is the easiest. Miriam returns the defective chair. Arnaud registers a return for 400 for the hand made wooden chair and uses the old VAT rate of 8%.
VAT reports change. Look carefully at the fourth quarter 2017 and first quarter 2018 reports before completing them.
Change of VAT in EZYcount
The EZYcount team has implemented a procedure to switch to the new rates. It's here
How to simplify your life
The easiest way is to invoice all services and sales for the year 2017 in full by 31.12.2017 at the latest. As of 01.01.2018, you change the VAT rates in your system to start 2018 cleanly. If you have projects that are in 2017 and 2018, the easiest way is to make an invoice at the end of 2017 for the part already completed.
If you are not registered for VAT
Nothing changes for you.
Get more information
Find the official text on the VAT change, in VAT info number 19 directly on the website of the Federal Tax Administration.
The EZYcount team is at your disposal for any questions regarding VAT changes at the following email address email@example.com
You can also contact the Federal Tax Administration in Bern on 058 465 71 38 or by email at firstname.lastname@example.org
Please note that this article was originally published in French, and that it was automatically translated to English.