Upcoming revision of the Swiss VAT Law – introduction to the changes coming into effect in the health sector - Tax and Legal blog

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We continue our series of blogs (n°1, n°2, n°3, n°4, n°5) on the upcoming partial revision of the Swiss VAT Law (VATL), which will come into force on the 1st of January 2025. In this blog, changes related to the health sector are presented.

From 1 January 2025, there will be changes to the governing legislation, along with new additions to VAT exempt without credit supplies and VAT rates within the Swiss VAT law, that impact the health sector.

VAT exempt without credit supplies: Extension of the scope

According to current practice, under Art. 21 of the Swiss VATL, the VAT exemption without credit in the health sector applies to supplies in relation to medical care and medical treatments provided in various forms of facilities. These include, but are not limited to, hospitals and centres for medical treatment and diagnosis (specifically in reference to hospital treatment and medical treatment in hospitals in the field of human medicine).

1. Changes in the provision of care facilities (art. 21, para. 2 cipher 2 rVATL)

Under the upcoming amendments, the criteria for qualifying medical care and treatments as VAT exempt without credit supplies is set to be extended to allow medical treatment taking place in other facilities, such as outpatient clinics and day clinics, to qualify as VAT exempt without credit supplies

2. New rule relating to the provision of care coordination services as a part of medical treatment

As per the current legislation, supplies rendered in connection with care coordination of a medical treatment are not falling under the exemption criteria under Swiss VATL.

This is set to change with the upcoming revision. As per 1 January 2025, the revised Swiss VAT law will broaden the provision and will in turn extend the scope of the VAT exemption without credit to additionally include care coordination services; this change is to be found under the rVATL, Art. 21, para 2 cipher 3.

3. Change in the provision of supplies provided by social welfare and social security institutions

Currently, art. 21 para. 2 cipher 8 of the Swiss VAT law specifies that services provided by social welfare and social security institutions, public home care organizations (Spitex) and retirement, residential and nursing homes are VAT exempt without credit.

From 1 January 2025 the provision will no longer solely govern over services provided by public bodies but will be broadened to also allow for private entities providing such services to classify under the scope of the VAT exemption.

Change of the VAT rate of menstrual hygiene products

Finally, as from 1 January 2025, menstrual hygiene products i.e., tampons, sanitary towels, panty liners, but also menstrual sponges, menstrual cups and other similar devices, will no longer be subject to the VAT standard rate of 8.1% but will be subject to the reduced VAT rate of 2.6% (as per the new provision in art. 25 para. 2 letter a cipher 10 Swiss rVATL.).

The reduced rate does not apply to, for example, incontinence products and adult disposables (diapers).

The changes linked to VAT exempt without credit supplies entail a scope extension. Consequently, additional supplies will fall under the definition of “VAT exempt without credit”. Whilst these amendments and new provisions of Swiss VATL provide clarity, it is worth noting for companies to consider whether to opt for VAT or to consider their exemption.

Next steps

It might be beneficial in some cases to consider opting to tax on VAT exempt supplies, in order to allow the recovery of input VAT on certain costs incurred in the framework of the activity.

If you would like to discuss this topic, please reach out to our key contacts below.

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Key contacts

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Romy Mueller - Partner, Indirect Tax

Romy is leading the Swiss Deloitte VAT team and is responsible for SAP Tax within Deloitte Switzerland. She has 20+ years experiences in advising Swiss and international companies in all VAT matters. Her focus is on international trade structures, M&A and post-merger integration.

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Coralie Dumoulin - Director, Indirect Tax

Coralie is a Director within Deloitte in Switzerland with 16 years of experience in VAT, working, notably, for a Swiss multinational company of the Manufacturing and Consumer Business sector, prior to joining Deloitte, and doing a 3-years secondment at Deloitte Global Tax Center (Europe). I have a wide experience in many Swiss and European VAT matters, including practical skills in dealing on a day-to-day basis with the systems.

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Tim Reck - Director, Indirect Tax

Tim an Indirect Tax Director based in the Deloitte Zürich office. With over 20 years' experience, Tim is one of the most experienced technical experts known for his work on advising international VAT across the 27 Members of the EU and Switzerland. Tim oversees VAT planning and execution of Swiss based principals trading internationally, from the initial conception of the company through to designing the efficient supply chain, the associated compliance, and ERP implementation. Tim is a Certified German Tax Accountant. He is a member of the VAT competency center of the professional organization for auditors and tax advisors, Expertsuisse. The International Tax Review has listed Tim as an Indirect Tax Leader 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022 and 2023 for Switzerland

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Mona Bouasria - Senior Consultant, Indirect Tax

Mona is a Senior Consultant in the Deloitte VAT team based in Lausanne. She started her career in early 2021 after graduating from the University of Fribourg with a master's degree in Economics. In her daily work, she is involved in projects related to Swiss VAT compliance and VAT advisory for international and Swiss clients.

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Michael Albihn-Boland  - Consultant, Indirect Tax

Michael is a Consultant in the Deloitte VAT team based in Zurich. He started his career in early 2024 after studying in London & Stockholm where he obtained his LL.B and LL.M. In his daily work, he is involved in projects related to Swiss VAT compliance and VAT advisory for international and Swiss clients along with working on M&A VAT risk assessments.

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