How Switzerland wants to make the country cheaper for foreign tourists

Nobody, ever, said: "Let’s go to Switzerland. I hear it’s really cheap there.”

In fact, foreign tourists discover - often to their utter shock - that Switzerland is not exactly a budget-friendly destination.

This is even more so, given the strength of the franc versus the euro and the US dollar.

This means that people visiting Switzerland from the United States or the eurozone will lose quite a bit of their spending power when converting their currencies into francs.

What is the government’s plan to make Switzerland a bit cheaper?

Currently, foreign tourists in Switzerland can claim a Value Added Tax (VAT) refund on goods they purchased in the country if they spend a minimum of 300 francs per day and per store.

This applies to a wide variety of goods - from the Rolex watch to the trinkets from a gift shop.

However, the Federal Council supports a multi-party parliamentary motion seeking to cut this refund threshold by half - from 300 to 150 francs.

This means, in essence, that while Swiss prices will not magically fall, or the franc-euro-dollar conversion rate become more attractive for foreign visitors, they will nevertheless be able to get more value out of their money while shopping in Switzerland.

It is not known at this point when the new rule will go into effect, as it still has to make its way through the parliament.

But given that it has the support of both the Federal Council and political parties, its chances of being implemented are good.

Why is Switzerland so costly for foreign tourists?

It all comes down to two things: the tourist’s income level and the exchange rate between their country’s currency and the franc.

Generally – as is the case now - the franc is stronger than other currencies, so people coming from abroad and converting their currency into francs will ‘lose’ in the purchasing power in the process.

So the strength of the franc is great for Swiss tourists going abroad, but not vice-versa.

That is the reason why so many foreign visitors complain about Swiss prices, forgetting that they are based on Swiss salaries, not on the ones in their country.