Switzerland, known for its robust economy and innovation-driven environment, is embracing several significant regulatory changes in 2024. These changes cover diverse sectors, from transportation to healthcare, and reflect the nation’s commitment to adaptability, sustainability, and competitiveness. Let’s delve into the key updates that will shape the Swiss business landscape this year:
Health and Welfare
Among the recent regulatory adjustments aimed at fortifying food safety, animal welfare, and health protection are the following measures:
- Origin Declaration Mandate: To improve consumer awareness, bakeries, restaurants, and retail outlets must now provide a written indication of the country of production for bulk-sold bakery goods.
- Maximum PFAS Limits: Maximum limits for per- and polyfluoroalkyl substance (PFAS) residues in certain foods have been established to mitigate environmental and health risks associated with these chemicals.
- Stricter Health Standards for Tattoo Inks and Cosmetics: Switzerland has adopted EU standards for tattoo inks and implemented stricter regulations for certain cosmetic components to enhance consumer safety.
- Evisceration Time Post-Slaughter: The time from slaughtering to evisceration at slaughterhouses has been extended to 90 minutes, ensuring food safety and improving animal welfare.
Environmental Regulations
Mandatory Climate Report
Some Swiss companies are now legally obliged to report on their climate-related risks. The Swiss government has issued guidelines specifying which companies and risks will be covered by this report. This initiative aims to enhance transparency and accountability regarding the climate impact of business activities in the financial sector. Here are the key points:
- Applicability: Public companies, banks, and insurance companies with 500 or more employees and total assets of at least CHF 20 million or annual turnover exceeding CHF 40 million are required to participate.
- Disclosure Requirements:
- Companies must publicly report not only the financial risk they face due to climate-related activities but also the impact of their business activities on the climate.
- They must outline their reduction targets for direct and indirect greenhouse gas emissions and describe their implementation plans.
- Task Force on Climate-related Financial Disclosures (TCFD): The ordinance ensures the binding implementation of TCFD recommendations by large Swiss companies.
Financial Regulations
Corporate Tax
Switzerland will enforce a minimum tax rate on large, internationally active companies. This measure aligns with the OECD and G20 countries' agreement and aims to ensure fair taxation for certain corporations.
- Scope of Application: The minimum tax applies to corporations with an annual worldwide turnover exceeding €750 million (CHF707 million), constituting approximately 1% of businesses operating in Switzerland.
- Implementation: Switzerland will implement this reform through a national supplementary tax. This tax will bridge the gap between the current tax burden, which is below 15% in most cantons, and the minimum tax rate. It will be levied on companies' profits with a turnover surpassing €750 million.
- Intended Financial Impact: In the initial year of implementation, the supplementary tax is anticipated to generate additional revenue ranging from CHF1 to 2.5 billion. Of this windfall, 75% will flow back to the cantonal coffers, while the remaining 25% will contribute to the federal government's revenue.
Value Added Tax
The cost of consumption in Switzerland is experiencing another increase, primarily due to adjustments in the Value Added Tax (VAT) rates on goods and services.
- VAT Rate Adjustments: The VAT rate on goods and services is rising from 7.7% to 8.1%. Additionally, the reduced rate applicable to food items will undergo a similar increase, moving from 2.5% to 2.6%.
- Purpose of VAT Increase: One key reason behind the VAT rate hikes is to contribute to the financing of the AHV state pension scheme. By adjusting the rates, Switzerland seeks to maintain fiscal stability and support its social security system.
- Special VAT Rate for Hotels: A special VAT rate applied to hotel charges will rise from 3.7% to 3.8%.
- Significance of the Referendum: The referendum addressed the VAT changes and raised the question of gender equality in retirement age. It emerged as one of the most contentious votes in Swiss history, particularly regarding the proposal to unify the official retirement age at 65 for both men and women.
Transportation
Vehicle Tax and Registration:
- The preferential tax treatment on the import price for electric vehicles will cease to be granted. Electric Vehicles imported into Switzerland are now subject to a 4% tax,
- Small and direct importers will face penalties from the Swiss Federal Office of Energy (SFOE) if their vehicles exceed a certain CO2 target upon registration.
Energy Efficiency Classification:
- With the revision of CO2 emission regulations, certain vehicle models will be reclassified into different energy efficiency classes.
- The average CO2 emissions of newly registered passenger cars in Switzerland, based on WLTP data, have decreased to 122 g/km in 2024, compared to 129 g/km in 2023 and 149 g/km in 2022.
Driver’s Licenses
- Restrictions on issuing an ID category during driver's license revocation.
- Increased minimum driving duration on public roads to 45 minutes for categories A and B for the practical driving test.
- The age limit for first-time driver's or learner's licenses will be removed, and existing license holders will be exempt from eye tests when obtaining new categories.
- Expiration of validity and requirement for the blue driver's license exchange by October 31, 2024, at the relevant road traffic office.
Safety Standards for Cars
- Mandatory installation of new driver assistance systems and accident data recorders in new vehicles.
- Requirement for new e-bikes to be equipped with speedometers; existing e-bikes must be retrofitted by April 1, 2027.
Pensions
Under the new rules, retiring later or continuing working part-time will be easier. The economic rationale is that more people working for longer will add to GDP and tax revenue, reduce the dependency ratio, and help with the challenges of funding pensions as the population ages.
Device Accessories
Only USB-C-compatible chargers for new mobile phones and other radio or wireless communication devices and systems will be sold. By mandating USB-C chargers, Switzerland aims to enhance compatibility across devices, ensuring that users can use the same charger for various gadgets. Standardizing on USB-C reduces electronic waste. With a single charger type, users won’t discard incompatible chargers, leading to fewer chargers in landfills.
Conclusion
By embracing these changes, Switzerland reaffirms its commitment to innovation and sustainability, solidifying its position as a global business leader in the 21st century.
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