We’ve got some essential VAT updates you should know about for the upcoming years. Let’s break it down, so you’re all set when you invoice your customers or tally your books for taxation.

From 1 January 2024 and Onwards:

Get ready for a slight bump in the VAT rates:

Normal Rate: It’s now 8.1%. Yes, this is up a notch from previous years.
Reduced Rate: Still a sweet deal at 2.6% for those qualifying items we'll talk about below.
Special Rate for Accommodation: Holding steady at 3.8%; your hotel stays are still getting a favorable rate.

Why the change? Well, there’s a good reason. Remember that vote back on 25 September 2022? Yep, the one about the AHV (Old Age and Survivors' Insurance) Act revamp and how to financially bolster it? Those amendments got the thumbs up, which led to these rate modifications. They are all about making sure our social security system is solid for the future.

Rewind to the Period from 1 January 2018 to 31 December 2023:

Just to recap, here’s what has been happening with VAT rates:

Normal Rate: It’s been sitting at a comfortable 7.7%.
Special Rate: For those providing pillow-time, aka overnight accommodation, you’ve been enjoying a rate of 3.7%.
Reduced Rate: At a rather nice 2.5%, many essential goods and services were covered, including those tasty groceries, the latest page-turner, and essential meds.

When to Charge VAT

Charge Swiss VAT when:

You're registered for Swiss VAT
The supply is taxable in Switzerland
The supply is not exempt or zero-rated

The place of supply rules determine whether a transaction is taxable in Switzerland.

VAT Exemptions and Special Cases

Certain supplies are exempt from VAT or zero-rated, including:

Export of goods
Certain cross-border services
Financial services
Healthcare and education services

Always clearly indicate on the invoice if a supply is exempt or zero-rated, citing the relevant legal basis if possible.

VAT – What’s All the Fuss About?

VAT, or Value Added Tax, is essentially the tax on the value added to goods and services. It’s like a relay race where each participant adds a little something to the baton (the product) before handing it off. The baton gets more valuable as it goes along, and a little tax is added each time it changes hands. The end consumer ends up with the baton and the final price tag, including VAT. This system ensures governments get their share to fund public services, without putting all the burden on one link in the chain.

Switzerland introduced VAT back in the 90's to harmonize with European standards and since then, it’s been an important piece of the Swiss financial puzzle. It's administered by the Federal Tax Administration (FTA) and serves as a significant source of revenue helping fund everything from roads to education.

For you, the self-employed, understanding VAT is super important, both for managing your pricing and keeping on the right side of tax laws. Whether you're selling services, creating exquisite handcrafted watches, or coding the next hit app, VAT affects your pricing and competitive edge in the market.

By keeping up-to-date with changes, you can plan ahead, price your products or services correctly, and ensure you're contributing to the welfare of the beautiful Swiss homeland without any unexpected hiccups come tax time.

Remember, this page is your friend, keeping you in the know-how so that you can continue building your business and serving your customers with confidence and compliance!