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04.12.2017

New VAT rates by 1 January 2018

For the first time since the introduction of VAT, the rates are decreasing!

Firstly, the temporary VAT increase for the disability insurance expires, leading to a reduction in VAT rates, and secondly, it increases again as the financing of Fabi (public transport financing) comes into force.

On balance, the rates change from 1.1.2018 as follows:

  • 8% new 7.7%
  • 3.8% new 3.7%
  • 2.5% remains unchanged

The question now arises, when to bill the new and when to bill still the old VAT rates. Basically, it's easy: the time of delivery or service is decisive. If the delivery / service takes place before 1 January 2018, the old rates will apply. If the delivery / service is provided on 1 January 2018 or later, it's the new rates.

Some examples:

  • You provide consulting services to a customer. 15 hours were provided in 2017, 10 hours in 2018. The 15 hours have to be charged at 8% VAT, the 10 hours at 7.7%, even if all hours are invoiced in 2018.
  • You charge the customer for a service subscription of CHF 1'200 incl. VAT, valid from 1.10.2017 to 30.9.2018. In this case CHF 300 shall be charged with 8% VAT and CHF 900 with 7.7%.
  • You receive an order to be completed in 2018. You want to charge a down payment in December 2017, but will not start with the order until 2018. The down payment is already to be billed with 7.7%, even if the billing happens in 2017.

On the expenses side you may get invoices with new VAT rates already and, in all likelihood, invoices with old rates in 2018. Accounting systems must be set up accordingly. From the fourth quarter of 2017, the federal tax administration will send adapted forms.

If you have private customers you must consider whether or not you would like to adjust the prices due to the VAT rate reduction. If you have cash transactions make sure to do the requested changes in your cash register system in time. If you do settle VAT according to the net tax rate, you will charge the official VAT rates as described above, but declare a likewise reduced net tax rate. (The current net tax rates 0.1% and 0.6% remain unchanged, all other rates are reduced).

Attention: If you bill too high VAT rates accidentally you have to pay the full amount to the federal tax administration!

Are any questions left open? We at Reiko are happy to help.