Switzerland’s neighboring countries are poised to benefit from an influx of shopping tourists who seek the attractive prices available just across the border. However, Switzerland is set to impose new regulations that will limit the amount of tax-free goods Swiss residents can bring back home on a daily basis.
A significant number of employees from Germany travel to Switzerland for work, while many Swiss citizens find themselves drawn to the southern neighbor for shopping. The allure of lower prices in Germany has led numerous entrepreneurs in border towns like Weil am Rhein, Constance, Lörrach, and Freiburg to cater specifically to customers from Switzerland, creating a symbiotic economic relationship. In light of this trend, Swiss authorities have become increasingly concerned about the potential revenue loss resulting from lower domestic tax revenues and value-added tax (VAT).
Consequently, they have decided to enact stricter regulations concerning tax-free purchases. Effective January 1, the threshold for tax-free purchases will be significantly reduced from the previous limit of 300 Swiss francs to just 150 Swiss francs (approximately 160 euros). If shoppers exceed this limit, they will be required to pay VAT upon entry into Switzerland, although the Swiss VAT rate remains comparatively lower at 8.1 percent, as opposed to Germany’s 19 percent.
Additionally, while Swiss shoppers can reclaim the VAT paid on purchases made in Germany when bringing them back into Switzerland, there are stipulations in place. For example, if an item’s cost is under 50 euros, it will not be eligible for a refund. The reaction among customers in neighboring areas is mixed, particularly at the Konstanz train station where travelers express their dissatisfaction with the new regulations. One young woman lamented the difficulty of staying within the tax-free limit when purchasing items like shoes, while another shopper carrying a full bag voiced frustration over the high prices.
From a broader perspective, opinions vary on how the new tax regulations will affect shopping habits. Rita Schwarzelühr-Sutter, the Parliamentary State Secretary in the Federal Ministry of the Interior and a politician from Waldshut, believes the change will have minimal impact on Swiss purchasing behavior. She asserts that Swiss consumers will still find the lower tax rates enticing. The Chamber of Industry and Commerce (IHK) Hochrhein-Bodensee also views the new limits as manageable, maintaining confidence in the health of the regional economy.
For businesses like Fresh Market of Baur, which operates in Constance, the expectation is that Swiss shoppers will adapt their buying strategies. Managing Director Sabine Seibl anticipates that customers will plan more strategically, making larger bulk purchases and possibly visiting in groups. Shopping tourism remains a vital economic driver for the southern regions of Germany. As per an IHK study, Swiss consumers collectively spend around 2.5 billion euros annually in border towns like Konstanz, Waldshut, and Lörrach.
To streamline the VAT reimbursement process for Swiss shoppers, plans are in place to digitize the current system. Starting in July, a pilot app will be introduced to simplify transactions and eliminate the need for cumbersome paperwork, according to Schwarzelühr-Sutter. On the Swiss side, an existing app allows individuals to register their goods and pay customs duties directly. However, a notable limitation of this app is that it applies the standard Swiss VAT rate of 8.1 percent, even on products such as food, which are typically taxed at a lower rate of 2.6 percent. Changes to this system are expected to be implemented by 2027.
