- Value Added Tax (VAT) Overview: Switzerland introduced VAT on January 1, 1995, transitioning from a turnover tax to align with EU standards. The VAT system underwent a complete revision in 2010, simplifying regulations and enhancing user-friendliness. As of January 1, 2024, VAT rates were raised to support social insurance.
- Taxation Principles: VAT is a general consumption tax applied at all production and service stages, targeting domestic consumption. It is levied on goods and services provided by businesses in Switzerland and on imports. Taxpayers can deduct input tax on purchases from their VAT liability, preventing cumulative taxation.
- Tax Rates and Collection: The standard VAT rate is 8.1%, with reduced rates of 3.8% for accommodation services and 2.6% for essential goods like food and medications. The Federal Tax Administration (FTA) is responsible for collecting VAT, while customs duties are managed by the Federal Office for Customs and Border Security (FOCBS). Approximately 20% of VAT revenue is earmarked for social insurance and other public services.
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