Why VAT rates changed
On 25 September 2022, the Swiss people approved the AHV 21 reform, which alongside raising women's retirement age to 65, provides additional AHV funding through a VAT increase. The new rates entered into force on 1 January 2024.
The increase is modest in absolute terms (0.4 percentage points for the standard rate), but has a significant operational impact on anyone issuing invoices, managing accounts or filing VAT returns. Every invoice template, every accounting system and every quarterly or semi-annual return must reflect the new rates.
In this guide we analyse the new rates in detail, compare old and new percentages, explain the transition rules for supplies straddling 31 December 2023, and provide an operational checklist for accounting and invoicing adjustments.
The new VAT rates from 1 January 2024
Switzerland applies three VAT rates. Here are the new percentages in force from 2024:
Standard rate: 8.1% (previously: 7.7%)
Applies to most supplies of goods and services in Switzerland: product sales, consulting, professional services, restaurant dining, accommodation with breakfast (if the price is not separated), telecommunications, energy and non-food consumer goods. This is the most common rate, covering approximately 85% of total VAT revenue.
Reduced rate: 2.6% (previously: 2.5%)
Applies to essential goods: foodstuffs (excluding alcohol and tobacco), non-alcoholic beverages, books, newspapers, magazines (including digital), medicines, feminine hygiene products and agricultural articles. Water supply through pipes is also included.
Special accommodation rate: 3.8% (previously: 3.7%)
Applies exclusively to accommodation services (overnight stays with or without breakfast) provided by the hotel and tourist industry. This rate was introduced as a tourism support measure and applies only to overnight stays, not to ancillary services such as spa, minibar or parking, which are subject to the standard rate.
The increase exclusively funds the AHV (old-age and survivors' insurance). The estimated additional revenue is approximately CHF 1.4 billion per year, flowing into the AHV Compensation Fund.
Old vs. new rates comparison
The table below summarises the changes for each rate:
| Rate type | Until 31.12.2023 | From 01.01.2024 | Change |
|---|---|---|---|
| Standard rate | 7.7% | 8.1% | +0.4 pp |
| Reduced rate | 2.5% | 2.6% | +0.1 pp |
| Special accommodation rate | 3.7% | 3.8% | +0.1 pp |
| Flat-rate method (weighted average) | Variable (from 0.1% to 6.5%) | Variable (from 0.1% to 6.7%) | Proportional adjustment |
Transition rules
Supplies straddling 1 January 2024 require specific treatment. The FTA published VAT Info 19 with detailed rules:
Supply date principle
The applicable rate depends on when the supply was made or goods delivered, not the invoice date or payment date. If delivery took place by 31 December 2023, the old rate applies even if the invoice is issued in 2024.
Ongoing supplies (subscriptions, framework contracts)
For contracts covering periods straddling 1 January 2024 (e.g. annual subscriptions, maintenance contracts), consideration must be split pro-rata temporis: the portion relating to the period up to 31 December 2023 is subject to the old rate, the portion from 1 January 2024 to the new rate.
Advance payments and deposits
If an advance payment was made in 2023 for a supply to be made in 2024, VAT should be calculated at the new rate (that of the time of supply). If VAT was already invoiced and declared at the old rate, a correction is needed in the first VAT return of 2024.
Credit notes and corrections
Credit notes relating to supplies made in 2023 must state the rate in force at the time of the original supply (i.e. the old rate), even if issued in 2024. This principle also applies to retroactive discounts, returns and price adjustments.
Invoicing impact
Updating invoices is the most visible aspect of the rate change. Here is the operational checklist:
Invoicing checklist
- Update all invoice templates (Word, Excel, management software) with the new rates: 8.1% / 2.6% / 3.8%. Verify that the VAT calculation is correct to the cent.
- Update QR invoices: the QR code must reflect the correct VAT amount. If you use invoicing software, verify that the rate update has been applied automatically or manually.
- For invoices with multiple rates (e.g. restaurant with food at reduced rate and alcoholic beverages at standard rate), verify that each line shows the correct rate and that VAT subtotals are consistent.
- For year-straddling invoices (ongoing supplies), prepare dual-rate invoices: one line with the portion at 7.7% (until 31.12.2023) and one line at 8.1% (from 01.01.2024).
- Communicate the rate change to clients, especially for long-term contracts with VAT-inclusive prices: the VAT increase may require a price adjustment or absorption of the additional cost.
Required accounting adjustments
The rate change requires adjustments to the chart of accounts and accounting software configuration:
New VAT codes
Create new VAT codes in your accounting software for rates 8.1%, 2.6% and 3.8%. Do not modify existing codes (7.7%, 2.5%, 3.7%), which must remain active for 2023 entries and subsequent corrections. AccountEX automatically manages the transition with pre-configured codes.
VAT transit accounts
Verify that VAT transit accounts (VAT payable, input VAT, VAT to remit) are configured to handle entries with different rates in the same period. During the transition, a single VAT return may contain transactions at both 7.7% and 8.1%.
Flat-rate and net tax rate methods
If your business uses the flat-rate method (Art. 37 VAT Act), the new flat rates have been published by the FTA and are in force from 1 January 2024. Update your accounting software with the new flat rate specific to your sector. Flat rates range from 0.1% to 6.7%.
VAT returns for the transition period
The Q4 2023 VAT return (or H2 2023) contains only transactions at the old rate. The Q1 2024 return may contain both old rates (corrections, credit notes) and new rates. Pay particular attention to reconciliation.
AccountEX automatically updated VAT rates for all users from 1 January 2024. If you use other software, manually verify that the update has been correctly applied.
Special cases
Certain sectors and situations require specific attention:
E-commerce and online sales
Online shops must update displayed prices if they are VAT-inclusive, update basket calculations and verify that payment interfaces (Stripe, PayPal, Datatrans) reflect the new rates. For year-straddling sales, the dispatch date determines the applicable rate.
Hotels and restaurants
Hotels must apply 3.8% to overnight stays and 8.1% to ancillary services. Restaurants apply 2.6% on food and non-alcoholic beverages for takeaway, and 8.1% for dine-in and alcoholic beverages. POS systems must be updated.
Imports and exports
Import VAT (collected by the FOCBS) applies the new rates from 1 January 2024. For goods cleared from 1 January 2024, 8.1% applies regardless of the order date. Exports remain exempt (0% rate).
Leasing and long-term rental
For leasing contracts with monthly instalments, the applicable rate is that of the month in which the instalment is due. Instalments from January 2024 onwards are at 8.1%. There is no need to pro-rate individual monthly instalments, as the supply is considered complete month by month.
Practical tips
- Update all invoice templates and accounting systems immediately. A VAT rate error is the issuer's responsibility: if you show 7.7% instead of 8.1%, you must still remit VAT at 8.1%, absorbing the difference.
- For ongoing supplies straddling 1 January 2024, prepare a precise pro-rata calculation. Document the apportionment method in case the FTA requests clarification during an audit.
- If you use the flat-rate method, verify your new specific flat rate: the FTA published the updated list in VAT Info 19. An error in the flat rate can have a significant impact on the return.
- Proactively communicate the rate change to clients, especially for fixed-price contracts inclusive of VAT. An uncommunicated increase can generate disputes and damage the business relationship.
- Retain transition documentation: for each year-straddling supply, document the actual supply date and the rate applied. This documentation will be essential in case of a VAT audit.
- Use AccountEX to automatically manage the transition: the software automatically applies the correct rate based on the supply date and generates VAT returns with the correct separation between old and new rates.
- Remember that the increase is permanent and has no expiry date. The rates of 8.1% / 2.6% / 3.8% will remain in force until any future legislative change — there is no automatic reversion to the previous rates.
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