In 2024, two major legislative changes will take effect in Switzerland, some of which will have a major impact on e-commerce. On the one hand, import duties will no longer be levied on industrial goods as of January 1, but the Swiss VAT rate will increase from 7.7% to 8.1%. In this blog, we explain how you can best prepare your online store for these changes.
Abolition of industrial customs duties
Prices for goods and services in Switzerland are significantly higher on average than in neighboring countries. Various factors contribute to the “high price island of Switzerland”: On the one hand, the high wage and cost level drives up prices. On the other hand, a number of tariff and non-tariff barriers to trade contribute to the foreclosure of the Swiss market and mean that companies can charge higher prices at home than abroad. This is now set to change, which is why the Swiss government has decided to abolish import duties on all industrial products from January 2024.
Industrial products are all goods with the exception of agricultural products, such as animal feed and meat products. In customs jargon, this refers to all goods in Chapters 25 to 97 of the customs tariff with the exception of some agricultural products in Chapters 35 and 38. As part of this measure, Switzerland is also reducing the current 9,114 tariff numbers to 7,511, bringing them largely into line with EU standards.
Below you will find a few important points that you should consider as a cross-border online shop operator:
- Even if import duties are abolished with the change in the law, customs declarations with corresponding tariff classification will remain in place in order to record statistical data and collect VAT on imports.
- Article data, such as weight, must still be specified. However, these are no longer checked as closely, as they are no longer relevant to fees.
Tariff number reduction
Update your tariff catalog for your products. As a result of the change, over 2,000 tariff numbers were removed.
You can download help and tariff number lists here: Changes as of 1.1.2024 – Abolition of industrial tariffs (admin.ch)
Return to the EU
- The abolition of industrial tariffs has no impact on exports from Switzerland or re-imports into the EU. If the Swiss import cannot be proven, customs duties will be charged on re-importation into the EU. Proper documentation prevents this.
- As import duties no longer apply, there is no need to apply for a refund when returning goods to the EU.
Adjustment of the VAT rate
With the abolition of industrial tariffs, VAT rates in Switzerland will be increased at the same time. The following rates will apply from January 1, 2024:
- Standard rate now 8.1% instead of the previous 7.7%
- Reduced rate now 2.6% instead of the previous 2.5%
- Special rate for accommodation now 3.8% instead of the previous 3.7%
All consumers and companies are affected by the changes. The adjustments therefore also affect online retailers who sell to Switzerland. If you are one of those affected, you should take the following measures:
System & contract adjustments
- Make sure that your store system, invoicing programs and all other systems that process prices and taxes are updated to the new VAT rates.
- Check existing long-term contracts and your general terms and conditions. Depending on the design, adjustments may also be necessary here.
Rethink price adjustments
- Think carefully about whether you want to pass on the VAT increase to your customers or whether you want to bear it yourself. The abolition of industrial tariffs in Switzerland could have an offsetting effect, meaning that no price adjustments are necessary.
- If you make price adjustments, explain transparently to your customers why the prices are changing. Short-term offers and discounts can help to mitigate the effects of the VAT increase for customers.
Attention transition period
- For orders placed before January 1 but delivered or completed after this date, you may have to observe special regulations.
- Define how you want to handle refunds and cancellations for transactions that took place before the VAT change.
- Make sure that your accounting is correct and that all transactions carried out under the old and new tax rates are correctly recorded and reported.