The first month of the year is just behind us and thus for companies following a monthly accounting closure procedure it is recommended to check by the end of January whether the calculation methodologies have been updated in the underlying systems and working files.
It has been communicated for some time now that the private share for company cars increases by 0.1% as from 1.1.2022. The first companies to take that into consideration will be the ones submitting VAT returns on a monthly basis. They will have to submit the first VAT return by 31 March 2022. The majority of companies, however, submit the VAT return on a quarterly basis. This change will therefore need to be implemented for Q1/22. The Q1/22 VAT return should be submitted by 31 May 2022.
Who needs to consider this change?
- Personnel responsible for the VAT declaration of a company
- Personnel responsible for the wage statements of a company
Slightly higher VAT cost for the employer
Taking the example of the Federal Tax Administration (FTA), we can see that a company car purchased for CHF 43,000 leads to additional VAT cost of 36.89 per year.
The higher the purchase price of the company car was, the more significant the increase of the VAT that must be paid as of 1.1.2022 will be.
If the company car was purchased for CHF 16,667 or less, the annual VAT amount to be paid is CHF 128.70, i.e. it remains the same as for the last years. This is because the monthly amount of the purchase price calculated with the rate of 0.9% is set to be CHF 150 as a minimum.
| Annual VAT to be paid until 31.12.2021 | Annual VAT to be paid as from 1.1.2022 |
Additional cost for the company |
|
|---|---|---|---|
| Car purchased for CHF 43,000 |
CHF 295.13 | CHF 332.02 | + CHF 36.89 |
| Car purchased for CHF 16,667 | CHF 128.70 | CHF 128.70 | - |
Relevance for companies applying the net tax rate/flat tax rate
Companies applying the net tax rate (SSS) or the flat tax rate method (PSS) (as opposite to the effective reporting method) also need to take this increase of the private shares of company cars into consideration. If such companies purchase services or supplies that are provided to their employees, such companies should declare the private shares as taxable turnover in their bi-annual VAT return.
If the company is using two different tax rates due two different business activities and the use of the company car cannot be allocated to one of those activities, the higher net tax rate must be applied to calculate the private share.
If a company applies a net tax rate of 3.5%, the calculation of the VAT payable as from 1.1.2022 looks as follows:
CHF 43,000.00 x 0,9 % = CHF 387
CHF 387 x 12 months = CHF 4,644.00 [incl. VAT]
CHF 4,644.00 [incl. VAT] x 3,5 % SSS = CHF 162.54
In this scenario the increase of the private share impacts such companies as follows:
| Annual VAT to be paid until 31.12.2021 |
Annual VAT to be paid as from 1.1.2022 |
Additional cost for the company |
|
|---|---|---|---|
| Car purchased for CHF 43,000 and applying a net tax rate of 3.5% |
CHF 144.48 | CHF 162.54 | + CHF 18.06 |
