The Swiss government has agreed to lower the VAT-free limit on goods from abroad to 50 Swiss francs, in an attempt to slow “shopping tourism” from Switzerland to Germany and to support Swiss businesses.

Value-added tax limit set to promote Swiss businesses

The new measures will mean that people going to shop in Germany from Switzerland will have to pay Swiss Value Added Tax on goods with a collective value of over 50 Swiss francs, upon their return across the border. With the extra charge on goods entering Switzerland from Germany, the government hopes that Swiss businesses will be able to compete on price with their German counterparts.

The phenomenon of Swiss people doing grocery shopping in Baden-Württemberg is not new, particularly in cantons near the border. Government Councillor for the Department of Home Affairs and Economics for Canton Thurgau, Walter Schönholzer, claimed the "shopping tourism business is estimated to be worth 10 billion Swiss francs a year.” He said that Thurgau “is losing around 700 million Swiss francs a year in tax revenue because of shopping tourism.”

Shopping tourism in Germany worth 10 billion Swiss francs a year

Swiss businesses and cantonal authorities hope that the new measures will generate revenue and inspire new entrepreneurs. "We have an enormous number of shops dying," said Schönholzer. "It's about the lifting of a blatant injustice."

Speaking on behalf of German business, Chief Executive Officer of the Chamber of Commerce and Industry Hochrhein-Bodensee, Prof. Dr. Claudius Marx, told the German Press Agency that they were not concerned about the move. "Of course, this does not please the retail trade, but we also do not consider it a measure to be afraid of," he said in reference to the new VAT rules.

He noted that, in spite of the new taxes, German products would still be cheaper as VAT rates in Switzerland are a third of what they are in Germany. He concluded that the price difference between Switzerland and Germany would still encourage shoppers to cross the border.