11/13/2023 3:22 pm (current 11/13/2023 4:28 pm)
Switzerland is considering halving the VAT exemption limit for purchases abroad in order to curb shopping tourism.
The Swiss are known for their shopping trips abroad, during which more than 8 billion francs are spent annually. To stop this trend, the Minister of Finance, Karin Keller-Sutter, proposes halving the so-called free value limit, from 300 francs to 150 francs. In future, Swiss VAT will be due for purchases over 150 francs. During his term, his predecessor, Ueli Maurer, described this step as “mission impossible” because he feared kilometers of customs traffic jams and a disproportionate effort.
“Tax-free windows”
Two years ago, despite Maurer’s warnings, there was support in the National Council and the Council of States for the proposal to end “subsidies for shopping tourism”. Previously, shopping tourists could reclaim foreign VAT at customs for purchases worth more than 50 euros, and imports into Switzerland remained tax-free up to an amount of 300 francs. This “tax-free window” between 50 and 300 euros was a nuisance, especially for retailers in border regions.
—>>> Noise from Switzerland
These cantons call for total abolition
The cantons of St. Gallen and Thurgau have even called for the total abolition of the value-free limit, but Swiss retailers see the halving as a step in the right direction. Dagmar Jenni, director of the Swiss Retail Federation, told Tagesanzeiger: “We are pleased that the unequal treatment of shopping tourists and Swiss customers when it comes to VAT is finally being resolved.” However, she believes that an exemption limit of 50 francs is more appropriate.
—>>> “Salary paradise” Switzerland
Shopping tourism in Vorarlberg
The attractiveness of shopping tourism was obvious, especially in Vorarlberg, where prices in retail, restaurants and hotels are significantly cheaper than in Switzerland. Furthermore, a trip to Vorarlberg also provided an experience. Swiss shopping tourists brought around 300 million francs to Vorarlberg’s stores every year, which stimulated the regional economy.
Despite the proposed changes, shopping tourists can still enjoy tax advantages through tips and tricks such as shopping with the whole family or crossing multiple borders. Sara Stalder from the Swiss Foundation for Consumer Protection warned in the Tagesanzeiger that halving the value exemption limit was just a “symptom control” and could lead to even more trips abroad. The Federal Council will soon begin a corresponding consultation, which could shape the final decision on the matter. (VOL.AT)