Today, both chambers of the Swiss Parliament unanimously approved the partially revised VAT Act. It is expected to enter into force on 1 January 2018. Tax Authorities expect around 30,000 new taxpayers – for the most part foreign companies.
After years of discussion and parliamentary debates, the so-called “small revision” of the Swiss VAT Act is completed. As no political group announced to call for a referendum, the new rules will probably become effective as of 1 January 2018. The Federal Council has to adapt the detailed provisions in the VAT Ordinance by this date as well.
What are the most important changes?
- The registration threshold for non-established businesses is factually suspended since it amounts to CHF 100,000 of revenue from domestic and international (worldwide) sales.
- Vendors which benefit from the import tax exemption for (B2C-) sales of products of minor value (i.e. shipment x tax rate < CHF 5) from outside Switzerland into Swiss territory have to register and pay Swiss VAT on these supplies if they derive an annual revenue of more than CHF 100,000 from such sales.
- The option to tax (e.g. for real estate property) shall be valid by either displaying VAT on the invoice or declaring the tax in the VAT return.
- The tax base for supplies or services is the market price (dealing at arm’s length) as opposed to the agreed consideration, if the vendor owns at least 20% of stock in the recipient, or vice versa. The same is applicable for foundations and associations with a close economic, contractual or personal relationship to the vendor/recipient. The rule is not applicable to pension funds.
- The reduced rate of 2.5% shall be applicable to online media and e-books, too.
- The margin taxation instead of the notional input tax deduction shall be re-introduced for collectibles such as art, antiques etc.
- The VAT exemption for acts of sovereign public administration shall be transferable to a third party by the competent public administration.
- The registration threshold for (branches of) public bodies is set to CHF 100,000 annually for supplies to other recipients than public bodies.
- There is no reduction of VAT recovery of charitiesif it’s made transparent to donors that they have no right to claim benefits they may receive at the discretion of the charity.
- The supply of electricity, gas and long-distance heating is taxed where such energy is actually used in B2C situations.
- There is no input tax credit if purchased goods and services are intended to be used for tax-exempt purposes (FTA’s current practice).
Important actions to be taken:
- Foreign suppliers in Switzerland: check if registration is mandatory under new law. If yes, adapt your IT, processes, and customer / supplier master data and – if applicable – end consumer prices.
Note: B2C supplies of electronic services to Swiss customers are deemed to take place in Switzerland. Suppliers with worldwide revenue higher then CHF 100,000 have to register.
- Swiss domiciled companies and branches which are not yet registered: check if registration is mandatory under new law (due to international revenue).
- Adapt master data for e-book / online media products.
- Public bodies: check if registration of offices / departments /agencies / branches can be cancelled under new law.