Change of VAT rates

As of December 31, 2017, the increased VAT rates introduced in 2011 to supplement the financing of disability insurance will end. However, it is unlikely that there will be a reduction in VAT rates. This is partly due to an increase in favor of financing the expansion of rail infrastructure. Additionally, the "Pension Reform 2020" could lead to another increase in VAT rates.

Current VAT Rates

‍Switzerland recognizes three VAT rates. There is the standard rate (currently 8.0%), a special rate for accommodation (currently 3.8%), and a reduced rate (currently 2.5%). Currently, a portion of each of these rates is used to supplement the financing of disability insurance. For the standard rate, this is 0.4 percentage points, for the special rate 0.2 percentage points, and 0.1 percentage points for the reduced rate. This was introduced on January 1, 2011, and is limited to the end of this year. Regularly, lower VAT rates should apply from January 1, 2018.

‍Development of VAT Rates

‍However, it is likely that there will be no change in VAT rates, at least not in full. On February 9, 2014, by a public vote, it was decided to expand all three rates by 0.1 percentage points each from January 1, 2018. This is to finance the expansion of the rail infrastructure (FABI). Additionally, there could now be a further increase in the rates from January 2018. In connection with the "Pension Reform 2020," it is planned to increase the rates so that they continue as before. The necessary public vote is scheduled for September 24, 2017. In the event of acceptance, affected companies would have little time left to adjust their ERP and billing systems. It is therefore advisable to prepare in advance for these potential changes.