Last year, Swiss voters voted “yes” to the OASI/AHV 21 reform proposal and also agreed to increase Switzerland's value-added tax rate.
The Old Age and Survivors Insurance (OASI/AHV 21) reform was adopted by the general population and the establishment to ensure financial support for AHV until 2030. Amendments to the AHV Act and Federal Decision on Additional Financing to AHVs Also approved were increases in value-added tax. To compensate for AHV's expected deficit, from 1 January 2024, her Swiss VAT rate will increase as follows:
The adjustment of the VAT rate is accompanied by an update of the regulation regarding net tax rates (Saldosteuersätze) according to sector and business activity. From January 1, 2024, the following revised net and flat tax rates will also apply:
VAT obligations arise regardless of the applicable tax rate at the time the invoice is issued or payment is received (depending on the billing method selected).
In all cases, the time or period during which the services are provided, and not the date of receipt of invoice or payment, is the determining factor in determining the applicable tax rate. For the purposes of tax increases, the time the service is provided is critical. This determines whether the taxpayer can claim for services at the previous (lower) VAT rate or whether the new (higher) rate must already apply.
Essentially, services provided before January 1, 2024 will be taxed at the old rate, while services provided after December 31, 2023 will be subject to the new higher tax rate.
What do I need to comply with for services provided over different accounting periods?
If the service is provided beyond the end of the year (such as a subscription, maintenance, or lease agreement), the service fee will be divided according to the period before and after January 1, 2024, and will be “pro-rated” between the current and new period. must be done. tax rate. For orders that are not yet completed as of December 31, 2023, we recommend that you issue a partial invoice for services that have already started. For example, in the case of construction work, the performance date is defined as the date on which work is actually performed on the building.
Settlement with the Swiss Federal Tax Administration (ESTV):
For the first time, for the third quarter of 2023 (using the valid method) or the second quarter of 2023 (using the net tax rate), companies will be able to account for sales to the FTA using both the old and new taxes. Has options to process. Fee. Charges related to services provided on or after January 1, 2024 that were to be recorded on a previous statement must be declared at the previous tax rate for the time being. Amendments to the above statement may be made at the earliest, but must be made no later than the end of the 2023 tax period.
Detailed information was published in February this year in MWST-Info 19 (VAT Info 19) under the title “Tax rate increase from 1 January 2024”.
Bottom line or what impact does this have on your company?
For each service provided at a time or during a period (performance of services) after December 31, 2023, special attention must be paid to correct the taxation of the turnover. Taxpayers should now classify their services and find out when they need to make their first payment at the new tax rate.
The adjustments required by your ERP system are often more complex and time-consuming than expected. We therefore recommend that you create an action plan in advance to ensure that your system converts to the new VAT rate in a timely manner and that invoices are issued correctly.
Decide on a specific “GO LIVE” date for your business. In the meantime, this means adapting systems, updating invoice templates, taking into account old and new tax rates, reviewing and adapting contract bases as necessary, adjusting price lists, and clarifying accrual issues. Decide when you need it. And the employees were trained.
