Swiss VAT reforms 2024 to 2028

The standard rate applies to the majority of all taxable supplies, including clothing, electronic devices, vehicles and services in consulting and hospitality.

The reduced rate of 2.6% protects everyday goods such as food, tap water, medicines, newspapers and books. The special rate of 3.8% remains reserved specifically for accommodation services (overnight stay including breakfast), to support the competitiveness of the Swiss tourism sector.

The time-of-supply principle under Art. 115 MWSTG as the central rule

Article 115 MWSTG is central to the timing of the tax rates: only the time at which the supply is made determines which tax rate applies.

Neither the invoice date nor the date of payment or booking is relevant for determining the applicable rate.

This legal requirement means that supplies completed physically or in time by 31 December 2023 must be reported at the old rate (e.g. 7.7%), even if they are only invoiced in February 2024.

Conversely, advance payments made in 2023 for supplies in 2024 must be declared at the new rate (e.g. 8.1%).

Case examples on acquisition tax

The following examples on acquisition tax show how complex pro rata reporting is for supplies spanning several periods. The acquisition tax liability (reverse charge procedure) applies in particular when domestic taxable persons obtain services from companies based abroad.

Example 1: license fees

In the first example, a license fee of CHF 5,000 is invoiced for the period from 1 September 2023 to 31 August 2024. It is split pro rata over 12 months.

• Period 2023: 4 months (September to December).
• Period 2024: 8 months (January to August).

For 2023, this gives a tax base of CHF 1,666.67 and, at 7.7%, tax of CHF 128.33; for 2024, CHF 3,333.33 and, at 8.1%, tax of CHF 270.00.

Example 2: unclear evidence

The second example deals with the consequences of insufficient allocation of supplies. It makes clear that, where facts are unclear or evidence is missing, the ESTV always requires the higher or newer tax rate to be applied.

If a company provides a service from 1 July 2023 to 29 February 2024 and does not split it on the invoice, the entire amount is taxed at 8.1%.

This underlines the need for companies to manage their invoicing processes precisely to avoid unnecessary additional costs.

Strategic adjustments and operational precautions

Switching to new tax rates takes far more than updating the master data in the system. The analysis of the necessary precautions shows that a holistic view of business processes is essential.

Adjusting invoice templates and terms and conditions

Companies must ensure that their invoicing systems can show both tax rates on the same document during the transition period. This is particularly relevant for final invoices on projects that started in 2023 and were completed in 2024.

General terms and conditions and price lists should also be checked to see whether they state explicit VAT rates or merely refer to the “VAT applicable by law”. Contracts with fixed gross prices can lead to lower margins when the tax rate rises, unless they contain adjustment clauses.

Training and information

Raising awareness among employees in purchasing, sales and accounting is crucial. Errors in recording the date of supply in accounts payable can lead to an incorrect input tax deduction or to additional claims.

Expense reports call for particular care: hotel bills often show different rates for accommodation (3.8%) and for breakfast or parking fees (8.1%). A flat input tax deduction without splitting the receipt leads to errors in the VAT return.

The partial revision of the VAT Act 2025: a new era of taxation

While the 2024 rate increase was primarily a fiscal adjustment, the partial revision of the MWSTG as of 1 January 2025 brings far-reaching systemic changes. The revision aims to increase tax fairness, reduce the administrative burden for SMEs and adapt the law to the realities of digital commerce.

Introduction of platform taxation (Art. 20a MWSTG)

A central element of the 2025 revision is the tax liability for electronic platforms. Until now, foreign mail order companies could often deliver small consignments (import tax amount below CHF 5) to Switzerland tax-free, as long as they did not reach the turnover threshold of CHF 100,000. This gave them a competitive advantage over domestic retailers.

From 2025, operators of electronic platforms that facilitate the sale of goods are treated as the supplier. This creates a supply chain fiction:

• The actual seller supplies the platform (under certain conditions, this supply is exempt from tax).
• The platform supplies the end customer and charges Swiss VAT.

This rule applies to both domestic and foreign platforms. Platforms must register in the VAT register if they generate turnover of at least CHF 100,000 per year with small consignments.

Platforms that only process payments, place advertising or merely refer customers without being involved in the ordering process are excluded from this rule.

Reform of the net tax rate and flat tax rate methods

Reporting with net tax rates is fundamentally reorganized as of 2025, to minimize tax optimization and distortions of competition. The previous practice of often combining activities under a single rate is replaced by a more detailed approach.

10% threshold: A separate net tax rate is now approved for every activity that accounts for more than 10% of total taxable turnover. This means that companies active in different sectors will have to apply several rates (theoretically up to nine) in one reporting period.

Special rules abolished: Previous simplifications such as the mixed-sector rule or special deductions on exports for users of the net tax rate method no longer apply.

Change of method: From 2025, a switch from the effective method to the net tax rate method leads to a correction of the input tax deduction on the current value of the existing goods and services. Conversely, a switch to the effective method allows a deferred input tax deduction.

The limits for using the net tax rate method have been adjusted slightly. For 2025/2026, the turnover threshold is CHF 5,024,000 (including VAT) and the maximum tax payable is CHF 108,000 per year. From 2025, foreign companies are explicitly excluded from the net tax rate method.

Annual reporting as a simplification for SMEs

A significant administrative relief for companies with stable turnover is the introduction of annual VAT reporting as of 1 January 2025.

Requirement: Taxable annual turnover must not exceed CHF 5,005,000.

Application deadline: Companies that wanted to use this method for 2025 had to submit the application via the ePortal by 28 February 2025.

Installments: To secure tax revenue, the ESTV sets installment payments during the year. Under the effective method, there are three installments (May, August, November); under the net tax rate method, one installment (August). The installments are based on the tax payable in the previous year.

This option reduces the effort of preparing VAT returns during the year, but requires careful liquidity planning, as the installments are due even if turnover fluctuates.

Effects on sectors and specific changes

The 2025 revision specifically addresses sectors and topics where there was previously uncertainty or where social and environmental goals are pursued.

Healthcare and Spitex services

To curb healthcare costs and promote equal treatment, the tax exemptions in Art. 21 MWSTG have been extended.

Spitex: From 2025, the care, support and housekeeping services provided at home by all Spitex (home care) organizations are excluded from VAT, regardless of whether they are run as non-profit or for-profit organizations. Companies that offer only household help, however, remain subject to VAT.

Medical treatment: Coordinated care services related to medical treatment are now explicitly excluded from tax. In addition, providing infrastructure to attending physicians in outpatient clinics and day clinics is now also exempt from tax.

Education and e-learning

From 2025, the place-of-recipient principle applies to interactive distance learning courses. As a result, educational services provided by Swiss providers to persons abroad are no longer subject to Swiss VAT.

Travel agencies and tourism

Travel services provided in the agency’s own name and performed abroad are now excluded from tax. Foreign travel agencies no longer have to register for their services in Switzerland. In return, domestic travel agencies lose the input tax deduction on services purchased in Switzerland.

Environmental steering and emission rights

From 2025, trading in emission rights, certificates and guarantees of origin for electricity is generally subject to acquisition tax (reverse charge). This also applies if both the seller and the buyer are based in Switzerland.

The digital transformation: ePortal, AGOV and the end of paper returns

The ESTV is pushing the digitalization of the entire reporting and filing process. Companies must prepare for fundamental changes in the technical infrastructure.

Mandatory portal use and the shutdown of “VAT return easy”

Since 1 January 2024, VAT submissions have in principle had to be made via the portal. A final transition period for paper returns ended on 31 December 2024.

An important milestone in 2026 is the shutdown of the “VAT return easy” service in May 2026. In future, the ESTV will rely exclusively on the “VAT return pro” service.

Introduction of AGOV as the new login standard

Access to the ESTV ePortal is becoming more secure and standardized. The previous CH-Login is being replaced by the new AGOV identity system.

Timeline: From 31 October 2026, registration and login via AGOV will be mandatory.

Procedure: Users should switch to AGOV now. Existing CH-Logins are transferred automatically during the process.

Final end: The CH-Login option will be shut down completely at the end of 2027.

Late payment interest is owed without a reminder if the tax is paid later than 60 days after the end of the reporting period. The de minimis threshold of CHF 100 ensures that very small amounts are not charged.

To avoid interest when a deadline is extended, the ESTV strongly recommends making payments on account.

The finalization deadline and its legal consequences

Deadline: 240 days after the end of the financial year. For companies with a year-end on 31 December, the deadline therefore ends on 31 August of the following year.

Content: Reconciliation of the booked turnover and input tax with the declared figures. Differences must be corrected using Form 550.

Options: Once the finalization deadline has passed, it is legally no longer possible to exercise or revoke an option to tax excluded supplies retroactively.

Outlook 2026 to 2028: further tax increases on the horizon

The adoption of the popular initiative for a 13th AHV pension in March 2024 creates a new funding need. Parliament wants to cover part of it through higher VAT.

On 2 October 2026, Parliament decided to extend the special rate for accommodation services until the end of 2031.

Strategic recommendations and summary

The analysis of the current and future VAT landscape in Switzerland makes clear that companies must treat tax compliance as an ongoing process.

Key areas of action for companies

Systemic precision: The time-of-supply principle (Art. 115 MWSTG) must be strictly applied when allocating supplies to periods. Invoices for supplies spanning several periods must be split pro rata.

Platform strategy: Companies that sell products via electronic marketplaces or operate such platforms themselves must reassess their tax position in light of the new supply chain fiction from 2025.

Choice of method: The new rules for the net tax rate method (10% threshold) make it more complex to apply.

Digital readiness: The switch to AGOV and the exclusive use of “VAT return pro” from 2026 require internal processes and access rights to be adapted early.

Liquidity management: In view of the possible increase from 2028 and the current rates of late payment interest, precise cash flow management for tax payments is essential.