VAT to rise to 8.5 % in 2028 – what SMEs should know now

What exactly was decided

The additional revenue from the higher VAT is expected to channel around 1.5 billion francs a year into the AHV from 2028, covering part of the cost of the 13th AHV pension, which has amounted to four to five billion francs annually since 2026. Additional salary contributions were deliberately avoided – the National Council prevailed with the pure VAT solution. Because the increase requires a constitutional amendment, the approval of the people and the cantons is mandatory. Until the vote, a degree of uncertainty therefore remains. What is clear: if the proposal passes, companies will have a good year to prepare for the changeover.

What the rate change means for your business

Anyone who remembers the changeover on 1 January 2024 (from 7.7 to 8.1 percent at the time) knows: the devil is in the detail. Till systems, invoicing and accounting software, web shops and price lists all need to be updated. Crucially, what matters is not the invoice date but the time the service is performed: a service performed in 2027 but invoiced only in 2028 is still subject to the old rate. Contracts spanning both periods are particularly demanding – subscriptions, maintenance and service contracts, leases with options or multi-year projects. Here, fees must be cleanly split between the periods before and after the cut-off date. The net and flat tax rates used by many SMEs would also be adjusted by the Federal Tax Administration.

Lessons from the last rate change

The experience of 2024 shows where things most often go wrong in practice: quotations valid beyond the cut-off date without a tax clause; advance payments and prepayments allocated incorrectly; recurring invoices not reissued in time; and till system updates scheduled too late. Knowing these pitfalls makes them easy to avoid. Our tip: include a clause in new quotations and contracts covering services from 2028 onwards stating that statutory VAT will be charged at the rate applicable at the time. That way you avoid later discussions with customers – and margin losses if you cannot pass the increase on.

Frequently asked questions from our advisory practice

‘Does the increase affect me at all if my customers are businesses?’ – In B2B, VAT is a pass-through item for customers entitled to deduct input tax, but you still cannot avoid updating your systems and invoices. ‘Do I have to adjust my prices?’ – That is a business decision: with gross prices for private customers, an increase you do not pass on directly reduces your margin; calculate what 0.4 percentage points mean for your turnover. ‘What happens to ongoing recurring invoices, such as leases with options?’ – These must be re-invoiced as of the cut-off date or accompanied by an adjustment notice. And finally: ‘When will I know for certain?’ – With the voting Sunday in November 2026; the Federal Tax Administration typically publishes the detailed rules a few months before entry into force.

How to prepare sensibly

There is no need for haste – only the popular vote will bring certainty. What does make sense is a look at your own contract and price structure during budget and price planning for 2027/2028: Which contracts run beyond the cut-off date? Which prices are agreed gross, which net? Is your software update-ready? Businesses using the new annual VAT return or net tax rates should also check whether their filing method will still be the most advantageous after the increase. We keep an eye on the proposal and the Federal Tax Administration’s practice statements for you, support you with VAT returns and system changeovers, and will gladly assess which filing method is right for your business.