Value Added Tax (VAT) is a kind of tax that is imposed on goods and services. This is done at every stage value is added and which finally transfers to the final consumer.

Switzerland has long been one of the most business-friendly countries. However, the Swiss authorities are aware that taxes drive the economy and that explains their move to have foreign investors pay Value Added Tax.

  1. What VAT rates apply in Switzerland?
  2. How will businesses and individuals benefit from these VAT rates?
  3. What is the Swiss VAT tax point?

VAT in Switzerland

What VAT rates apply in Switzerland?

Following the revision of the VAT law by the Swiss government, the country is gaining more taxes from customer transactions. Early in 2018, the law came to effect and imposed new tax rates. If you are planning to visit Switzerland or do business there, then you need to be informed of the new tax rates which are summarized below.

Note that the consumer bears most of the burden of tax imposed on any good.

VAT rates

  • The government put a standard rate of 7.7% to all affordable consumer goods and services. If you decide to buy a car or clothing materials, then be ready to pay 7.7% VAT.
  • Booking hotels and staying there for a night will cost the customer a tax rate of 3.7%.
  • The majority of consumer goods such as foodstuffs, medicine, books, and newspapers have the least VAT rate. A consumer will be required to pay 2.5% of VAT.

How will businesses and individuals benefit from these VAT rates?

The Swiss government is so considerate of investors from other countries ensuring they are not exploited with taxes. The investors are at an advantage as well as the government in various ways.

  1. Low tax rate

Both companies and individuals will be required to pay a VAT rate of as low as 2.5% and on the higher side, 7.7%. The VAT rate is very friendly to both the business and the consumer as product prices are also affordable. Switzerland happens to be one of the countries with the lowest tax rates.

  1. Transparency

Every company or individual will be required to disclose the amount of tax paid on a given product making tax tracking very simple.

  1. VAT is paid only once

Since VAT is charged at every stage the product gains value, the earlier paid tax is refunded to the owner ensuring no single product is taxed twice.

  1. Tax evasion becomes less rewarding

Unlike in the past where businesses would evade tax, it is almost impossible to evade tax payment since the VAT is charged at every stage a product is added value. The refund and disclosing of previously paid VAT also make companies comply.

What is the Swiss VAT tax point?

In Switzerland, VAT taxes apply from the date of supply. These taxes are payable every 30 days at the expiry of the tax reporting period.

If you are facing VAT related problems, approach tax professionals to help you. Where you are not sure what to do, these experts will take you to step by step. Again, it is better to acquaint yourself with the Swiss taxation laws.