Partial revision of VAT Law – reduction of competitive disadvantages

To provide similar competitive conditions for Swiss enterprises around 30’000 foreign companies will newly be subjects to the Swiss Value Added Tax

There will be changes in issues such as tax obligations, tax exemptions, VAT procedures and data protection. These topics will be addressed in a loose succession of articles in our blog.


Worldwide turnover determines tax obligation

Until now only the turnover achieved within Switzerland determined whether a company was subject to VAT or not. Only enterprises with a turnover of less than CHF 100’000 were exempt. For foreign service providers, this proved to be a nice competitive advantage, as they could provide their services – if the turnover in Switzerland was less than CHF 100’000 – without VAT. Now all companies with a worldwide turnover of over CHF 100’000 will become subjects to the Swiss VAT from the first Swiss franc turnover they make. To ensure that taxable persons cannot avoid the VAT they will have to prove to the authority that their turnover is below CHF 100’000 (reversal of the burden of proof).


Special arrangement for mail-order operators

So far mail-order operators could profit form the exception for small orders. All mail-orders with less than CHF 5.00 VAT were exempt. This meant that on mail orders of a value of less than CHF 62.50 (VAT of 8 %) or CHF 200 (VAT of 2.5 %) per mail-order no import-tax had to be paid. Foreign mail-order providers therefor could profit from this regulation without a limit and import such small mail-orders without ever becoming subject to the Swiss VAT. From now on mail-order operators have to register their company with the Swiss VAT authority if the total of their mail orders exceeds CHF 100’000 and pay the respective VAT. The price of their deliveries for Swiss consumers will raise by 8 respectively 2.5 %. Enterprises delivering to Switzerland will also have to check and adopt their customs clearance process.


Mail-order operator arrangement will come in force as of 1.1.2019

The new rules for mail-order operators will become effective as of 1.1.2019, because the Swiss Post – who handles most of the mail-orders to Switzerland – needs, due to technical reasons, more time to be able to implement the new legal provisions.


More tax subjects, clarifications, expenses and tax income

The tax authority estimates that she will have to handle about 30’000 new tax subjects from foreign countries and expect substantial additional expense. Furthermore, the authorities will use the AIE for clarifications in other countries to find out if a company has to become tax subject in Switzerland. Foreign companies become tax subject with their first delivery to Switzerland. The authority expects that these changes will lead to additional VAT taxes of around CHF 70 Million, where about 60 % result from using the worldwide turnover to determine the tax obligation.


Fiscal representation remains a must

Also in the future foreign enterprises, will have to require Swiss assistance. They need to establish a Swiss fiscal representative, how acts as their contact with the VAT tax authority. We have a lot of competence Fiscal representation, which is a service Caminada Treuhand AG Zug and Lucerne offers for many years to many international clients. We can also help you to align your processes when it comes to cross-border trade.

If you have questions concerning tax obligations for foreign enterprises or concerning fiscal representation our VAT expert Ruth Käslin, will happily help you along.

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