7.7% as from 1.1.2018!
On 1 January 2018 a revised VAT Law will come into force as a result of the partial revision of the existing law. This will have a considerable impact on Swiss and foreign businesses. Moreover, the standard VAT rate will be reduced from 8% to 7.7%.
The changes will affect (inter alia) the following areas:
What VAT rate will apply as from 1 January 2018?
The change in the VAT rate does not form part of the revision of the VAT Law. After the referendum was held on 24 September 2017 the standard VAT rate will be reduced to 7.7% (accommodation services rate from currently 3.8% down to 3.7%).
What turnover is relevant for the mandatory VAT registration?
As from 1 January 2018, the worldwide turnover of the business will be taken into account when deciding if a Swiss VAT registration is mandatory.
For businesses which up to now have been exempt from the obligation to register (because a large part of their supplies is regarded as being rendered abroad), they will now be subject to mandatory Swiss VAT registration.
Foreign businesses will basically be liable to Swiss VAT and to mandatory VAT registration if they have a turnover of CHF 1 with place of supply in Switzerland and a total worldwide turnover of more than CHF 100,000.
What simplifications exist with regard to the voluntary option for VAT on exempt supplies?
As from 2018, an option for taxation of exempt supplies (e.g. renting out business premises) can be made by way of declaration in the VAT return, without openly disclosing the VAT in the rental contract or the invoices, in order to be able to use the right to recover input VAT on related costs.
What does margin taxation now apply to?
Margin taxation will be re-introduced for works of art, antiques and collector’s pieces. Under margin taxation, the VAT is charged only on the difference between purchase price and sale price (the margin). In return, a deemed input tax deduction can no longer be claimed for the above-mentioned objects.
What changes are there with the deemed input tax deduction?
“Unused” objects may now also carry entitlement to make a deemed input tax deduction. They do not have to be intended for resale, it is sufficient if they are used for the business activity. However, there should not have been any open disclosure of VAT on the purchase.