Change in VAT rates effective 1 January 2018?

For the first time in the history of Swiss value added tax, there may be a reduction in the standard and special VAT rates! Whether and to what extent a reduction will be introduced on 1 January 2018 is up to the Swiss voting population to decide on 24 September 2017 as part of the vote on the reform of Old-Age and Survivors In-surance (AHV).

Definitive consequences as at 31 December 2017

The temporary additional financing of disability insurance (IV) from VAT funds will come to an end on 31 December 2017. The three tax rates will automatically decrease as a result. However, an increase of 0.1% to finance the railway infrastructure (FABI) will also come into force on 1 January 2018. Taking both these effects into account, the tax rates as at 1 January 2018 would be as follows:

Standard rate:  7,7%
Special rate:  3,7%
Reduced rate: 2,5%

Possible consequences of the “Pensions 2020” reform programme

It is not yet known whether the standard and special tax rates will be subject to an additional increase for pension funding purposes as at 1 January 2018. If the voting population accepts the proposal put to the vote on 24 September 2017, the VAT rates will remain at their current levels.

Are you, your company and your accounting software ready for a change in tax rates?

If the voting population rejects the proposed reform of Old-Age and Survivors Insurance, VAT rates will be reduced from 1 January 2018. This will leave just over three months to prepare for the changeover. The following points will need to be taken into account if the tax rates are modified:

  • Tax codes in accounting software:
    New output and input tax codes will need to be introduced (standard rate: 7.7%, special rate: 3.8%).
  • Applicable tax rate:
    The date on which a service is provided is decisive for determining whether it should be invoiced at the current or new tax rates. Services provided before the end of 2017 should be invoiced at the current tax rates. If your company issues an invoice in December 2017 for a service that will not be provided until January 2018 or later, the new tax rate should be used.
    With regard to input tax, the following principle applies: “The tax that has actually been invoiced may be deducted”, even if the tax rate shown is incorrect.
  • Invoicing forms and templates will need to be modified
  • Consequences to be taken into account in contracts, offers, etc.:
    VAT must be indicated in contracts (either by specifying the tax rate as a percentage or by including the statement “plus statutory VAT”).

Conclusion and recommendations

If the increase in tax rates is rejected in the vote on 24 September 2017, there will only be a very short period of three months until the end of the year in which to implement all the necessary changes. Steps should be taken in advance, particularly with regard to IT system migration. Automatic booking processes and information printed on invoicing forms should be checked before 1 January 2018. In general, we advise against overwriting existing tax codes with the new rates. Instead, new tax codes should be entered with a new validity period.

For more information, please contact your personal advisor at PricewaterhouseCoopers or get in touch with our VAT specialists. We look for-ward to hearing from you!

Newsflash: The Swiss Federal Council has published some key amendments to the current version of the Swiss Financial Market Ordinance (FinfraV/FMIO)

The new regulations on initial and variation margins for OTC-derivatives, the platform trading obligation, the delayed recording and reporting obligation for securities dealers and foreign market participants, and the prolonged exemption for pension funds and investment funds for retirement.

The Swiss Federal Council has published some key amendments to the current version of the Swiss Financial Market Ordinance (FinfraV/FMIO) affecting a wide variety of market participants such as counterparties of OTC-derivatives, securities dealers, pension funds, and investment funds for retirement.

The new regulations on initial and variation margins for OTC-derivatives under the Swiss Financial Market Infrastructure Act FinfraV/FMIO will enter into force on the 1st of August 2017. The variation margin requirements under FinfraV/FMIO will enter into force on the 1st of September 2017 and will affect all counterparties to OTC-derivatives not being small non-financial counterparties (NFC-). The key new requirements under the new initial and variation margins regulations will be as follows:

  • The new regulations are much stronger aligned to the final initial and variation margin regulations under EMIR, the corresponding European regulation. The new Swiss regulations do however not impose an obligation to review the legal opinions applicable to OTC-contracts on an annual basis. This is a welcomed alleviation for the Swiss market participants.
  • It is now generally possible to re-use initial margins granted in the form of cash if they are held in custody with a third party custodian bank or a central bank.
  • It is now possible to change the method for the calculation of the initial margin in each derivative category also after a mutual agreement on such calculation has been achieved.
  • There will no mandatory haircut of 8% anymore if the variation margin paid in cash is not provided in the mutually agreed currency.
  • The obligation to exchange initial and variation margins for options on equity, indexes or similar equity derivatives will apply only beginning as of the 4th of January 2020.
  • Units in UCITS funds can now also be used for initial and variation margin purposes.
  • No initial margin must be provided anymore for the foreign exchange component of Cross Currency Swaps.
  • OTC-derivatives related to covered bonds are under certain conditions totally or at least partially exempted from the initial and variation margin obligation.

The platform trading obligation, that requires that certain specifically designated derivatives must be traded on a trading venue, has formally set in force. There is however currently no derivatives category that has been designated as subject to the trading obligation on a platform.

Another important alleviation for securities traders and foreign market participants at Swiss trading venues is the delayed entry into force of the recording and reporting obligations. These obligations will now only enter into force on the 1st of October 2018 for Swiss securities dealer. The transactions and orders that have occurred in between the 1st of January 2018 and the 30th of September 2018 will however have to be recorded and reported no later than until the 31st of December 2018 (“backloading”). The recording and reporting obligations will enter into force for foreign branches of Swiss securities dealers and foreign participants of Swiss trading venues as of the 1st of January 2019.

The exemption for pension funds and investment foundations for retirement from the clearing obligation has been extended until the 16th of August 2018.

Please do not hesitate to contact us for a free consultation on any of these new provisions.


Martin Liebi
Head Capital Markets
0041 76 341 65 43

Swiss pension outcomes are falling – could “matching” be part of the answer?

Low, even negative, interest rates and uncertain growth prospects is becoming a “new normal” in Switzerland. The impact on pension fund finances is well documented – pressure on funding levels, tough to find the right investment opportunities and focus on cost transparency. This environment also poses challenges for insured members, and as a result their employers. Expected retirement outcomes have fallen. What does this mean for employees and employers? 

10 years ago an insured person would expect higher returns on any money they invest for retirement than they would today. The mandatory interest credit for Swiss pension plans according to BVG/LPP was 2.50% in 2007 compared to 1.00% today.  Ten-year Swiss government bonds yields have fallen from 2.6% to -0.1% in the same period. This not only affects expected returns on the assets set aside but also the cost of providing an income for life after retirement. Life expectancies for retiring pensioners have increased by about 1 year for females and 2 years for males in that time which also needs to be funded.

All of these factors have had a major impact on retirement outcomes. Based on our calculations, in 2007 a 40 year-old could invest CHF 7’100 and expect a pension of a CHF 1’000 a year for that investment. Today a 40 year-old would expect to have to invest CHF 14’700 – more than doubling of the cost of retirement over 10 years. In that time, inflation expectations have also fallen, but overall the cost of retirement has increased.

What can pension funds do?

Pension funds aim according to our experience to maintain the level of retirement benefits they provide while financing the promises already made. But pension funds are in a “zero-sum” game – without extra funding, members will ultimately receive lower benefits on average when results are not what was expected. Robust analysis and forecasting of what employees can expect to receive, combined with clear communication may be the best what they can do. Other measures are down to employees and employers as recipients and sponsors of retirement benefits.

What does this mean for individuals and employers?

Find higher returns? In conventional collective Swiss plans, employees share in the overall returns of the fund as they are credited to them. This limits opportunities to take more risks, with an expectation of higher returns. For higher earnings, it is possible to have individual strategies through a “1e” pension plan. These plans can be used to seek higher returns, but this may not be suitable for all.

Later retirements? Without saving more, employees have to retire later for the same outcome.  In some ways this is only reasonable: If life expectancies increase without changing retirement ages, the proportion of life we spend in retirement rises. Employers may have to prepare for the ageing effect on their business – not only their workforce recruitment and retention, but possibly their business strategy and target markets.

Employers pay more? One answer may be employers paying more. But employers face economic challenges themselves, with increasing competition and pressure for results. For most companies, raising costs or investing cash may not be palatable.

Employees pay more? Creating more awareness of the individual options available for the employees is one option. Additional voluntary employee contributions are typically deductible for tax purposes. Some employees don’t have confidence in their pension plan and are not keen to lock away money until retirement.

How can companies create further incentives for employees to pay more? A look abroad could help.

Could “matching” be part of the solution?

In the US as well as the UK, contribution “matching” is widely used in pension plan design. Employer contributions are adjusted to “match” those of employees. When an employee contributes a percentage of their salary into the plan, the employer contributes an amount directly linked to what the employee pays. This could be 1:1 – i.e. if the employee pays 2% of pay, employer pays the same. Or some ratio like 2:1 or 1:2.

The big advantages of matching are two-fold: it encourages employees to pay more; and it focuses employer spending where it is most valued by its employees. One of our clients challenged the common Swiss plan option of employers paying the same for all employees, whereas employees can choose their level: “Why can employees choose to pay less, but I cannot follow when they do?” A reasonable question that matching helps to address.

The challenge is that legislation in Switzerland currently restricts the ability to apply matching within the regular plan. The law requires the employer contribution rate to a pension plan to be the same for all employees in the same situation (e.g. age, grade etc). “Matching” can be done through the buy-in system. So with the right plan design, matching can be incorporated within the Swiss plan.

This won’t for every situation as the use of buy-ins is subject to certain caps and restrictions which may become a barrier. Plan administration may be more complex. But in challenging times for pension outcomes, new solutions may be needed.


Richard Köppel
Pensionskassen-Experte SKPE, People and Organisation
Tel. +41 58 792 11 72
Adrian Jones
Director, People and Organisation
Tel. +41 58 792 40 13

Switzerland: New social security treaty between Switzerland and China

A social security treaty between Switzerland and the People’s Republic of China (China) will enter into force on 19 June 2017. The maximum posting period is 72 months. For the duration of the posting employees (regardless their nationality) are exempt from the compulsory insurance obligations of the country of occupation which are covered in the social security treaty. As from 19 June 2017 it will be possible to obtain a Certificate of Coverage.


Click here for more details



Véronique Schaller
+41 58 792 5036

Natalia Graf
+41 58 792 4324


Winning the fight for female talent: How to gain the diversity edge through inclusive recruitment

Gain the diversity edge through inclusive recruitment

Today, more and more CEOs regard talent diversity and inclusion as vital to their organisation’s ability to drive innovation and gain competitive advantage. And as businesses across the world inject greater urgency into their gender diversity efforts, we’re seeing an intensifying focus on hiring female talent. In fact, 78% of large organisations tell us they’re actively seeking to hire more women – especially into more experienced and senior level positions.

PwC’s new report, Winning the fight for female talent, explores how organisations are seeking to deliver on their gender diversity attraction goals. We also examine the impact of these approaches and – more generally – how they’re matching up to the career aspirations and diversity experiences and expectations of the modern workforce.

Download the full report here.


Steady progress in boosting female economic empowerment, but gender pay gap still a major issue

PwC Women in Work Index

Prize of pay parity in OECD could mean US$2 trillion increase in total female earnings

Latest PwC Women in Work Index reveals:

  • Gradual improvement in female economic empowerment in OECD
  • Nordic countries still lead the way, with Iceland, Sweden and Norway taking top 3 spots
  • Poland climbs into top 10 thanks to gains in cutting female unemployment
  • Other top 10 places held by New Zealand, Slovenia, Denmark, Luxembourg, Finland and Switzerland
  • But gender pay gap poses major challenge, with parity still decades if not centuries away
  • Potential prize of closing the gap could boost total female earnings by US$2 trillion

21st February, 2017 – Slow but steady progress continues to be made in OECD countries towards greater female economic empowerment, according to a new PwC report.

But the gender pay gap continues to be a major issue, with the average working woman in the OECD still earning 16% less than her male counterpart – despite becoming better qualified.

The latest PwC Women in Work Index, which measures levels of female economic empowerment across 33 OECD countries based on five key indicators, shows that the Nordic countries – particularly Iceland, Sweden and Norway – continue to occupy the top positions on the Index. Poland stands out for achieving the largest annual improvement, rising from 12th to 9th. This is due to a fall in female unemployment and an increase in the full-time employment rate.

PwC analysis shows that there are significant economic benefits in the long term from increasing the female employment rate to match that of Sweden; the GDP gains across the OECD could be around US$6 trillion.


When it comes to closing the gender pay gap, countries such as Poland, Luxembourg and Belgium could see the gap fully close within two decades if historical trends continue. But much slower historical progress in Germany and Spain means that their gap might not close for more than two centuries, although making this a policy priority could accelerate progress. The gains from achieving pay parity in the OECD are substantial – it could result in a potential boost in female earnings of around US$2 trillion at today’s values.

Download the full report here.



Hans Geene
+41 58 792 9124

Charles Donkor
+41 58 792 4554

New report: PwC’s 20th Global CEO Survey – Harnessing the power of human skills in the machine age

The talent challenge: Harnessing the power of human skills in the machine age

pwc_ceo survey_2017

With the rise of automation, we’ve reached a point where we’re questioning the role people play in the workplace. How to achieve the right mix of people and machines in the workplace is the critical talent question of our age.

Fifty-two percent of CEOs say that they’re exploring the benefits of humans and machine working together and 39% are considering the impact of Artificial Intelligence on future skills needs. This is a delicate balancing act for CEOs in every sector and region.

However, you can’t have a machine age without humans and 52% are planning to increase headcount over the next 12 months. They are focused on obtaining the skills that they need to create a world where humans and machines work alongside each other.

Different skills will be needed, roles will disappear and others will evolve. Some organisations will need fewer people, but others will need more. There will be a rebalancing of human capital as organisations adjust.

Exceptional skills and leadership will be needed, and yet 77% of CEOs say they see the availability of key skills as the biggest business threat. Todays in demand skills are exclusively human capabilities – adaptability, problem solving, creativity and leadership. Software cannot imitate passion, character or collaborative spirit. By marrying these skills with technology, innovation can thrive and organisations can succeed in competitive market places.

CEOs have an enormous challenge ahead of them; it is the role of business leaders to protect and nurture their people to show that in the technological age, humans are their priority.

Our new report – The talent challenge: Harnessing the power of human skills in the machine age – looks at the dilemmas facing CEOs and their HR teams in today’s environment and how their businesses can stay ahead.

Download the full report here.



Hans Geene
+41 58 792 9124

Charles Donkor
+41 58 792 4554

Swiss pensions – hot topics for employers in 2017 and beyond

2017 will offer up further challenges and questions for companies on their Swiss pension plans. We highlight five of the key discussion points:

  1. Valuing pensioner obligations

Reported funding levels remain at what appear to be good levels. But this doesn’t tell the full story. One key driver of funding levels is the technical interest rate used to value pensioner obligations. This rate is chosen by the fund board and not linked to market conditions.

Falls in long-term bond yields imply that future long-term returns available to funds are lower now than they were in the past. Funds need to consider updating their interest rate to reflect this. If they don’t go far enough, the value of obligations will be understated.

  1. Falling bond yields have driven up bond asset values – beware the mismatch

Despite a rebound in the last quarter, the fall in bond yields over 2016 means that some asset classes rose in value, especially bond and fixed interest assets, which increased by around 5%. At lower interest rates, property rental income streams have a higher valuation and cheaper mortgages inflate valuations.

Some funds will be tempted to reward members for this “positive” news with giving higher interest on their accounts. The mismatch between how assets are valued (based on market principles) and obligations (based on selected assumptions) means that the true picture of a pension fund is not obvious on the surface. Decisions need care as a result.

pwc_issues for 2017

  1. Growing interest in real estate assets needs caution

2016 saw continued interest in property as an asset class for pension funds. There are many good reasons for Swiss funds to invest in real estate. They offer stable income and are illiquid long-term assets. This can suit long-term investors like pension funds.

Property should have a role to play in any diversified asset portfolio. But history shows that economic shocks hitting the property market can come at any time. A friend once told me “Swiss property prices never go down” – such statements raise alarm bells as people tend to forget the real estate crisis in Switzerland in the early 1990s! Pension funds need to be watchful.

  1. 1e pension plans – new law brings opportunity for employees and sponsors

So-called 1e pension plans allow individuals to choose their own investment strategy for their savings on earnings above CHF127K. A new law governing these plans is expected to come out in the first half of this year.

The law will remove risks for employers. As past rights can transfer, this could mean lower balance sheet liabilities for IFRS and US GAAP reporters as defined contribution accounting should be possible. 1e gives employees the opportunity to fit their savings strategy to their own needs – whether that is a conservative and balanced portfolio like current funds or something more aggressive.

  1. New focus IFRS reporting for pensions

The risk-sharing nature of Swiss plans does not fit well within IFRS today. Some of the benefits of plans are linked to fund performance (e.g. interest credited and retirement conversions) so risk is shared between employer and employees.

2017 should see the introduction of new ways to address this challenge. These options will give companies the opportunity to better reflect the nature of their plans in the financial position. This will lead to some fundamental questions for companies: What will happen if there is underfunding? Will employees be asked to contribute? How will we manage changes to benefits?

Like its predecessors, 2017 promises to be another challenging year in Swiss pensions.

Download here the PDF version.

Update: New confirmations required for 2016 taxation of German cross-border commuters’ pensions

Following a ruling by the German Federal Supreme Finance Court in Karlsruhe at the end of July last year, Germans who commute to Switzerland for work are about to see a change in the way their pensions are taxed. The law governing taxation of contributions and benefits from mandatory occupational benefit schemes in Switzerland (BVG, often simply referred to as pension funds) is to be amended. This will particularly affect employees with an extra-mandatory pension cover. The changes will enter into force for the 2016 fiscal year. Those affected will need a new confirmation to be able to declare their income tax correctly.

Germans commuting to work in Switzerland are basically covered by the BVG if they are subject to mandatory federal old-age and survivors’ insurance (AHV/AVS) and meet the age and pay requirements for admission to a BVG benefits scheme. So far the German tax authorities have not required any special certification or confirmation from the Swiss pension fund. It’s quite a different matter when it comes to child allowances, daily sickness benefits insurance contributions and other areas.

Read more…

P&O global research: ‘The Ethics of Incentives’

PwC is working with Professor Alexander Pepper and Dr Susanne Burri of The London School of Economics on a ground-breaking global study into the ethics of incentives and the fair distribution of income in society.

As a senior business leader, we would very much value your contribution to this piece of work. Our survey takes a maximum of 20 minutes and includes questions which are designed to investigate the complex views we all have about pay fairness. Please click on the link below:


Please submit the survey by Friday 20th January 2017.

All responses will remain confidential – but there is an option to sign-up for an advance copy of the findings if you so wish.
I hope you will find the time to contribute.

Dr. Robert W. Kuipers
PricewaterhouseCoopers AG
Birchstrasse 160, 8050 Zurich

Phone: +41 58 792 4530

If you have any questions, please write to us at