New VAT Rates in Switzerland
The VAT rates in Switzerland are going to change: instead of going up, for the first time ever they are going down, even if probably only for a short period of time. The normal rate, which applies to almost all services, is now being reduced from 8% to 7.7%, the special hospitality rate to 3.7% (from 3.8% so far) and the reduced rate remains unchanged at 2.5%.
Note: Which tax rate is to be used depends neither on the invoice nor the payment date, but on the time or period when a service is delivered.
What does this mean for you?
- All services provided before 1 January 2018 are subject to the old tax rate of 8%, whereas all those after 1 January 2018 are to be invoiced at the lower rate. For all Findea customers, this means that you should rather close the old year with an invoice issued as at 31 December 2017 and then immediately switch to the new VAT rates. It is by far the easiest and safest way to handle the VAT rate reduction.
- For lump-sum projects (e.g. involving partial payments and instalments), the services provided before 31 December 2017 is also subject to 8% of VAT; in my opinion, it is not allowed to file an annual return with 7.7% in 2018 in which services provided in 2017 would also be reported. Hence, it is recommended to invoice lump-sum projects at 31 December 2017 and contact the customer to clear this.
- The assessment becomes more difficult if a lump-sum project has been ‘prepaid’, either entirely or in part, with advance or on account payments. If a project goes beyond the end of the year, at least a portion is taxed at 7.7%, and finally a customer balance remains.
Software Updates
All invoicing programs with permanently predefined VAT rates have to be updated by the end of the year or, depending on the business model, even earlier. Afterwards a simulation for various types of invoices should be carried out to ensure that in each case tax is properly reported and posted. More updates might need to be done when posting incoming invoices.
Findea Will Support You
Our partner firm Findea will gladly help you identify, clarify and take the measures needed for a smooth passage to the year 2018. Apply for a consultation at your earliest convenience.
If you have any questions please do not hesitate to contact us or your Account Manager direclty.
Kind regards
Michele Blasucci
CEO
