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From restrictions on driving e-vehicles to save electricity – raising the VAT rate –  and looking at the percentage of people with a migrant background living in Switzerland – our team of payroll experts thought it might be fun at this time of the year, to look at some of the news headlines from Switzerland and share these with our readers. Enjoy!


VAT or Value Added Tax

This tax was introduced in Switzerland in 1995 at a standard rate of 6.5%. Since then, the minimum and maximum standard rates have varied between 6.5% and 8.0% respectively. From 01 January 2018 through 31 December 2023, the VAT rates applied in Switzerland are: Normal rate: 7,7 % Special rate: 3,7 %.

While this may seem like a lot for most people living in Switzerland, we only have to look across the border to our neighbours in the EU member states and see that actually, we are not that badly off here! VAT was first heard of in 1954 in France and was known as “Taxe sur la valeur ajoutée” or TVA for short. This was then eventually extended to the entire European Economy. The average VAT rate in the EU currently stands at 21% which is also 6 points higher than the minimum standard rate required by the EU.


European Union value added tax - Wikipedia



VAT Rates in EU – source Wikepedia


While the VAT rates in Switzerland compared to the EU are certainly good news, the not so good news and under the motto of “be careful what you wish for” – is that on 25 September 2022, Swiss voters voted in favour of raising the rate of VAT to pay for state pensions. The result is that from 01 January 2024, the standard rate of VAT will rise from 7.7% to 8.1% and the reduced rate will move from 2.5% to 2.6%. While 8% may seem high for some – at least we know where the money is being used for, and when we look at the highest VAT rate in the EU at 27% in Hungary – somehow 8% doesn’t seem that bad after all!


e-Vehicles – possible restricted use

The second interesting snippet of news to come out of Switzerland this week, is with regards to e-vehicles. For sometime, these have been regarded by many ecologically-minded experts, as being a prime solution to some of the worlds greenhouse issues.

It has now been announced that Switzerland’s federal government plans to restrict the use of electric vehicles if there is a serious shortage of electricity.

As can be expected, Electric vehicles can consume substantial amounts of electricity. Taking an average Swiss car for example, which drives around 13’000 kilometres per year with a consumption of 200 Wh/km – a household with two electric vehicles would use 5’400 kWh per year. This is substantially more than the average family uses in electricity per year which is kWh 4’500.

Based on this type of calculation, the the Swiss government has recently announced that in times of severe electricity shortages, the use of electric cars would be restricted for essential journeys, such as food shopping or driving to work.

Given that Swiss domestic electricity production covers only around 25% of the country’s energy needs with the remaining 75% being imported in the form of crude oil, petroleum products, gas and coal – driving e-vehicles is hardly a 100% green alternative anyway. Now with possible use restrictions in times of electric shortages – people may start to re-think their intention to drive e-vehicles in future. Watch this space!



Nearly 40% of people living in Switzerland with migrant background

And finally, official confirmation on what most people in Switzerland already knew anyway: data released by the Federal Statistical Office (FSO) shows that in 2021 – 39% of Switzerland’s population had a migrant background.  And from the total, 31% were actually born abroad with a different nationality and a further 8% were children of this group.

The data from 2021 shows that around 63% of those acquiring Swiss nationality were born abroad and 37% were born in Switzerland. The largest groups are now Germans in first place at 21%, Italians in second place at 11% and French in third spot at 9%.

Looking back at recent history, the number of German nationals living in Switzerland has increased significantly since 2009 when about 250’000 German nationals had permanent residence in Switzerland. This number rose to around 300’000 five years later. And by 2019, the number of Germans living in Switzerland accounted for about 450,000.

When we look at the early history Switzerland and how it was formed and populated, there has always been migration. From the Bronze and Iron Ages through to Roman times and since then – migrating peoples have helped shape this country. No surprise then, that this continues to this day!


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