The partial reform of the Federal Value Added Tax Law is intended to eliminate the competitive disadvantages of Swiss companies. The changes will come into effect on 1 January 2018. Which sectors are affected, and what are the implications for foreign companies that have business activities in Switzerland?
There is not a lot of time available for analyzing the individual implications for particular companies and making corresponding modifications. At a first glance, the changes are not major; as so often, however, the challenges are to be found in the details. It is the Swiss companies which primarily have to get to grips with these. However, foreign firms which have business activities in Switzerland are also significantly affected by this partial reform.
Which sectors are affected?
If we are considering what types of company the amendments relate to, the holding company must certainly be mentioned. Where the focus is on particular industrial sectors, those affected include
- Real estate (including construction companies)
- Energy suppliers
- Providers of hotel and restaurant services (including takeaways)
- Political units
We should also mention dealers in works of art and antiques, as well as companies/organizations that are partially financed by donations and contributions from sponsors.
Further, special attention must be paid to cross-border online trading. There are new tax liabilities for online traders from outside Switzerland.
New obligation for foreign companies to register
Foreign companies having business activities in Switzerland must basically review their tax position in Switzerland. The provisions regarding the obligation to register have been re-drafted; a foreign company may thus be obliged to register even if its turnover is as little as CHF 1.
Need for action
Once the company has analyzed the implications, it will become clear whether changes will be required as from 1 January 2018. These may include the determination of the sale prices, amendments to contracts and to Terms and Conditions as well as changes in the accounting and, generally, in the VAT-relevant organization.
One way to approach the reform would be to go through the following questions:
- Does my company belong to one of the industrial sectors mentioned above, or is it a holding type of company?
- What changes will affect my company specifically?
- What implications do the changes have for my business processes (including the master data used), accounting and the VAT return?
- Video: VAT Reform
- Indirect Tax & Export Control
- Article: VAT Act: Swiss Parliament released final version