The Swiss Federal Council adopted a partial revision of the Value Added Tax Ordinance (VAT) on 21 August 2024. It contains the implementing provisions of the revised Value Added Tax Act (VAT Act) and changes unrelated to this revision of the VAT Act, in particular concerning the methods for net tax debt rates and flat-rate rates, as well as the obligation to use the online portal.

In addition, the Federal Council set the entry into force of the revised VAT Act for 1 January 2025.

The amendment to the VAT Act adopted by the Federal Chambers on 16 June 2023 entails adjustments to the VAT Act, particularly in the areas of platform taxation, annual accounting, subsidies and collaboration between public authorities.

The partial revision of the VAT Act also includes changes that are not due to the revision of the VAT Act, in particular with regard to the methods of net tax debt rates and flat-rate rates, group taxation and the extension of the obligation to use the online portal.

When applying the optional methods of net tax debt rates and flat-rate rates, the usual input tax in the sector is taken into account on a flat-rate basis. Taxable persons do not have to establish the VAT paid on their expenses (input tax), which reduces their administrative burden. Taxable persons with a lower than average input tax burden also benefit from financial advantages.

The revision of the OTVA aims to limit the tax planning possibilities offered by the net tax debt rate and flat rate methods, and to place greater emphasis on simplified VAT accounting. It provides for corrections to the input tax deduction in the event of a change in accounting method, in order to avoid changes motivated primarily by financial reasons. Due to these corrections, the deadlines for switching from the flat rate method to the effective method, and vice versa, are shortened.

In addition, companies active in several branches will now be able to apply more than two net tax debt rates. As they will count each activity at the corresponding net tax debt rate, they will no longer have to estimate in advance which combination of two rates is the most advantageous among the combinations of rates applicable to all their branches.

In future, taxable persons must use the electronic portal of the Federal Department of Finance for procedures relating to the annual statement, the net tax debt rate and flat-rate methods, as well as group taxation. If applications and notifications are not submitted via the electronic portal, the Federal Tax Administration (FTA) will send them back to the taxable person, reminding them of their obligation under Art. 123 of the revised VAT Act. However, if the portal is temporarily inaccessible for technical reasons, the taxable person will not incur any losses.

The partially revised OTVA will enter into force on 1 January 2025, at the same time as the amendment to the LTVA. The obligation to use the online portal for procedures relating to the net tax debt rate and flat-rate methods, group taxation and withdrawal of the tax liability declaration will only be introduced on 1 January 2027.