Worldwide VAT, GST and Sales Tax Guide
Zurich
EY
Maagplatz 1
CH-8005 Zurich
Switzerland
Indirect tax contacts
Benno Suter
+41 (58) 286-43-86 benno.suter@ch.ey.com
Silke Hildebrandt-Stürmer +41 (58) 286-32-41 silke.hildebrandt-stuermer@ch.ey.com
Alida Primitivo
Berne
EY
Schanzenstrasse 4a
CH-3001 Berne
Switzerland
Indirect tax contact
Benno Suter
Geneva
EY
Route de Chancy 59
P.O. Box 48
CH-1213 Petit-Lancy 1 (Geneva) Switzerland
Indirect tax contacts
Benno Suter
+41 (58) 286-42-78 alida.primitivo@ch.ey.com>
+41 (58) 286-43-86 benno.suter@ch.ey.com
+41 (58) 286-43-86 benno.suter@ch.ey.com
Ashish Sinha +41 (58) 286 59 06 ashish.sinha@ch.ey.com
Zug
EY
Gotthardstrasse 26
CH-6302 Zug
Switzerland
Indirect tax contact
Andrea Sohst
+41 (58) 286-75-20 andrea.sohst@ch.ey.com
include Swiss branches of foreign entities, to the extent that the foreign entities are under the same “joint supervision” as the other VAT group members. Although the Principality of Liechtenstein is considered to be domestic territory for Swiss VAT purposes (and vice versa), it is not possible to form a VAT group that includes both Swiss and the Principality of Liechtenstein entities as the Principality of Liechtenstein and Switzerland have independent tax authorities.
The tax group must appoint a tax representative who will deal with the VAT-related proceedings of the group. The minimum period for which the tax group can exist is one year.
VAT group members are treated as a single taxable person with a single VAT number. The VAT group submits a single, consolidated VAT return for all its members. VAT is not chargeable on transactions between group members.
All members of a VAT group in Switzerland are jointly and severally liable for VAT debts and penalties.
From a practical perspective, the creation, modification or liquidation of a Swiss VAT group is regulated by very specific conditions, both in terms of authorization and timeline.
Holding companies. Holding companies can be included in a VAT group in Switzerland, subject to the usual conditions of control (see above). In addition, any other person can be included in a VAT group, even if it is not VAT registered, as long as control is given.
Cost-sharing exemption. The VAT cost-sharing exemption has not been implemented in Switzerland.
Fixed establishment. A permanent establishment is defined in Switzerland as a fixed place of business through which the activity of the business is wholly or partly carried on.
Non-established businesses. A “non-established business” is a business that does not have a legal seat or fixed establishment in the territory of Switzerland. A non-established business that makes supplies of goods or services in Switzerland must register for VAT if it is liable to account for Swiss VAT on the supplies.
A non-established business making any local supply of goods or services in Switzerland that are not subject to reverse charge in Switzerland becomes liable for Swiss VAT if its global turnover exceeds the CHF100,000 threshold. This results in an obligation for any non-established business with a global turnover of more than CHF100,000 annually, to register for Swiss VAT from the first franc of taxable turnover generated in Switzerland (whereas a Swiss-established business is obliged to register for Swiss VAT only once the threshold of CHF100,000 is reached).
Non-established entities supplying low-value goods to Swiss customers for a total of CHF100,000 or more annually need to register for Swiss VAT, import the goods and charge Swiss VAT on the sale to Swiss customers.
Once a non-established business is registered for Swiss VAT purposes, it is liable to charge VAT on all taxable supplies that have a place of supply in Switzerland. Non-established businesses register for a rest-of-world VAT number and need to include any transactions with touch point in the Swiss Customs Territory executed by all international fixed establishments or/and the international headquarter.
Tax representatives. In principle, a non-established business must appoint a Swiss established tax representative if it supplies goods or services subject to Swiss VAT. The tax representation relationship must be notified to the tax authorities via the filing of an ad hoc tax representation letter. The tax representative does not assume the VAT liability of represented taxable persons. From 1 January 2025, the Swiss Federal Tax Administration may waive the requirement for foreign businesses to appoint a tax representative in Switzerland if they fulfill the procedural obligations in another manner.
Reverse charge. The reverse-charge mechanism applies to the following situations:
• Services acquired by a Swiss recipient where the services are subject to the general place of supply rule, supplied by a supplier domiciled abroad who is not registered for Swiss VAT, and the place of supply is in the Swiss Customs Territory (place of supply in the customer country). Exceptions apply for telecommunication or electronic services to nontaxable recipients and services subject to special place of supply rules.
• Data carriers without market value imported into Switzerland, and certain services and rights are associated with these data carriers.
• Work on immovable goods located in Switzerland provided by a business established abroad and not registered for Swiss VAT purposes, if the supply has not been subject to import VAT.
Any Swiss recipient is liable for the settlement of VAT under the reverse-charge mechanism if the recipient is a taxable person or if the value of the supplies received exceeds CHF10,000 per calendar year.
As an exception to the general reverse-charge rule, supplies of telecommunication and electronic services to persons who are not registered for VAT are subject to Swiss VAT and require the supplier to register for and charge VAT in Switzerland, if their worldwide turnover exceeds the annual threshold of CHF100,000.
For any other services that fall under the general place of supply rule, the reverse-charge mechanism applies regardless of whether the recipient of the services is registered for VAT.
If a non-established supplier becomes registered for Swiss VAT purposes, the reverse-charge mechanism on standard services provided no longer applies, however, and the supplier must charge VAT on all taxable standard services supplied to Swiss recipients.
The place of supply for most supplies of services is the customer’s country (fallback rule). In the circumstances described above, the customer must account for VAT under the reverse-charge procedure. However, some exceptions exist. These exceptions, for which additional consideration regarding the place-of-supply rules needs to be made, include the following:
• Services that require the physical presence of the customer, who is a natural person (i.e., a private individual, and not a legal entity), at the place where the supplier is domiciled (e.g., beauty or curative therapies and treatments, family advisory and childcare), even if exceptionally supplied from a distance.
• Re-sold travel services of tour operators at the place of supplier.
The following services are taxed at the place of activity or real estate:
• Services in the fields of culture, art, sport, science, education or entertainment and similar services, including the activities of organizers and related activities
• Restaurant services
• Passenger transport services
• Services related to immovable property (for example, intermediation, administration, valuation, services in connection with the preparation and coordination of construction works such as architectural, engineering and supervising services, land and building monitoring, and accommodation services)
• Services in the field of international development and humanitarian aid
The domestic reverse-charge mechanism applies to supplies of electricity in cables, natural gas via the natural gas distribution grid and district heat if the Swiss service recipient is a VATregistered business.
The place of supply of electricity by cable or natural gas via the gas distribution network is based on where the recipient of the supply is established or in the absence of an establishment, where the electricity, gas or heating is consumed, even though these are supplies of goods and not services.
• Insurance
• Education
• Tour operators’ re-selling of travel services
• Real estate
Option to tax for exempt supplies. Certain supplies of goods and services may be voluntarily subjected to tax by openly charging VAT on the invoice (option), e.g., certain health care, educational and cultural services as well as renting or leasing of immovable commercial property. However, restrictions may apply and the right to opt should be reviewed on a case-by-case basis.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” In Switzerland, taxable turnover must be reported in the quarter (or month, if monthly declarations are filed) in which the sales invoice for a supply is issued or in which payment is received (if no invoice is issued). If the declaration is made on a cash basis, the turnover must be declared for the quarter in which payment is collected. Exceptions apply in the case of VAT rate changes and various other special events. The application of the method on payment collected requires a written application with SFTA.
Deposits and prepayments. The tax point for a deposit and prepayment is when the supplier receives the consideration or when the invoice is issued, whichever is earlier.
Continuous supplies of services. There are no special time of supply rules in Switzerland for continuous supplies of services. As such, the general time of supply rules apply (as outlined above). However, exceptions apply when the VAT rates change, and then specific transitional rules would apply.
Goods sent on approval for sale or return. There are no special time of supply rules in Switzerland for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. The tax point for reverse-charge services for a taxable person is when the invoice is received or when the service fee is paid. In all other situations, including declarations made on a cash basis, the effective payment date is decisive.
Leased assets. There are no special time of supply rules in Switzerland for supplies of leased assets. As such, the general time of supply rules apply (as outlined above).
Imported goods. The time of supply for imported goods is the official date of importation.
Distance sales. There are no special time of supply rules in Switzerland for supplies of distance sales. As such, the general time of supply rules apply (as outlined above). However, special rules for import VAT and customs duties are applicable.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax to the extent that the associated purchases of goods and services are business related and are not used for exempt supplies or for receiving public subsidies. By the time the input tax is declared, the input tax must have been paid or been declared as a reverse charge. A taxable person generally recovers input tax by deducting it from the output tax. Tax due is always meant to be the sum of output tax, reverse charges and input tax deductions.
Input tax includes VAT charged on goods and services supplied in the Swiss Customs Territory, VAT paid on imports of goods and VAT self-assessed on reverse-charge supplies.
• Original VAT invoices.
• Proof of payment (if requested by the Swiss tax authorities).
• A Certificate of Taxable Status for the claimant, which is issued by the competent tax authorities in the country where the claimant is established, to prove the business status of the claimant.
• Applications for refunds of Swiss VAT may be sent to the following address:
Eidgenoessische Steuerverwaltung
Hauptabteilung Mehrwertsteuer
Schwarztorstrasse 50
CH-3003 Bern Switzerland
• Refunds are generally made within six months after the date of application.
Late payment interest. The SFTA may pay interest on refunds made after the refund period of six months after the date of refund application if reciprocity rules are observed. Late payment interest is paid at a rate of 4.75% per annum.
H. Invoicing
VAT invoices. A Swiss taxable person must generally provide a VAT invoice for all taxable supplies made, including exports. A VAT invoice is necessary to support a refund under the VAT refund scheme for non-established businesses.
Credit notes. A VAT credit or debit note may be used to correct the VAT charged and reclaimed on a supply of goods or services. These documents must be cross-referenced to the original VAT invoice. If sent electronically the receival of the credit note should be tracked.
Electronic invoicing. Electronic invoicing is allowed in Switzerland, but not mandatory.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is allowed but not mandatory in Switzerland. There is no threshold beyond which taxable persons are required to adopt electronic invoicing in Switzerland. Requirements related to electronic invoicing are the same as those for paper invoicing.
Data and information transmitted and stored electronically that are relevant for claiming input tax, or levying or collecting tax, must meet the following requirements in order to be of the same evidential value as data and information readable without auxiliary means:
• Proof of origin
• Proof of integrity
• Dispatch not contested
These requirements can be met by applying an advanced electronic signature.
Simplified VAT invoices. Invoices issued by automatic cash register systems (receipts), do not need to include information on the recipient of the supply, provided that the consideration disclosed on the receipt does not exceed the amount of CHF400.
Self-billing. Self-billing is allowed in Switzerland. No formal additional requirements other than the general invoicing requirements apply to self-billing. However, parties are required to agree on processes, i.e., containing a receival tracking and proxy for the self-billing entity, which entitles the use of the supplier’s name and invoicing data. A receipt tracking and log file is recommended.
Proof of exports. Swiss VAT is not chargeable on supplies of exported goods. However, to qualify as VAT-free, export supplies must be supported by evidence that the goods have left Switzerland. Acceptable proof includes the officially validated customs documentation.
Foreign currency invoices. If a Swiss VAT invoice is issued in a currency other than the domestic currency, which is the Swiss franc (CHF), no conversion rate or CHF amount must be stated on the invoice. The amounts must be converted into CHF in the VAT report only, using the appropriate exchange rates published by the federal tax administration, which are available on its website (monthly or daily rates are available). If no clear tax advantage is gained, the use of a group exchange rate may be allowed.
Supplies to nontaxable persons. Swiss VAT law does not, in general, distinguish between B2B or B2C supplies. The only exception is in the context of supplies of telecommunications and electronic services and the application of the reverse-charge mechanism to those services. As such, there are no special rules for invoices issued to private consumers, and therefore full VAT invoices must be issued for all supplies.
Records. In Switzerland, examples of what records must be kept for VAT purposes include VAT returns, agreements, general accounting, invoices, booking vouchers documenting each booking record, etc.
Records that must be archived must completely comply with the Swiss archive and bookkeeping requirements and need to be accessible and readable with immediate effect without delay. In principle, records must be kept in the Swiss territory but may also be retained outside, provided Swiss bookkeeping and archiving rules are strictly complied with.
Record retention period. VAT books and records must be held for 16 years (26 years for documents related to immovable property). This considers the 10 years of absolute statute of limitations in Switzerland and the six additional years specifically for VAT. Considering the absolute statute of limitation period, an additional five years must be added to the above number of years if a legal proceeding is ongoing.
Electronic archiving. Electronic archiving is allowed in Switzerland, but electronically stored documents must meet specific criteria of authenticity, origin and integrity, among other criteria.
I. Returns and payment
Periodic returns. Swiss VAT returns are usually submitted for quarterly periods. If the taxable person has applied to be taxed under the net tax rate method (that is, the tax due is calculated by multiplying the gross total taxable turnover by the balance tax rate authorized by the Swiss tax authorities), VAT returns must be submitted on a half-yearly basis. Taxable persons with a regular excess of input over output tax may apply to submit monthly returns. VAT liabilities must be paid in CHF. Taxable persons generating yearly turnover not exceeding CHF5,005,000 from taxable supplies, may apply to submit annual returns.
VAT returns are due 60 days after the end of the VAT settlement period.
Periodic payments. The VAT amount due must be paid (by bank transfer only) 60 days after the end of the VAT settlement period.
Electronic filing. Electronic filing of the VAT returns and some selective forms is mandatory in Switzerland for all taxable persons. However, filing electronically does not prevent a non-established business from appointing a tax representative.
Data and information that are relevant for claiming input tax or levying or collecting tax can be transmitted and archived electronically or in a similar manner. They have the same evidential value as data and information that are readable without auxiliary means, provided the following requirements are met:
• Proof of origin
• Proof of integrity
• Dispatch not contested
Special legal provisions require the transmission or storage of the data and information mentioned in a particular form.
Payments on account. Payments on account are not required in Switzerland, unless the optional annual VAT reporting regime is applied, in which case quarterly installments fulfilling certain conditions must be settled.
Special schemes. Net tax rate scheme. If a taxable person, established in Switzerland, does not generate more than CHF5.024 million turnover from taxable supplies annually and in the same period does not have to pay more than CHF108,000 in VAT, calculated at the net tax rate that applies to it, it may report VAT under the net tax rate method. When using the net tax rate method, the VAT due is determined by multiplying the total of the taxable considerations, including tax, generated in the reporting period in Switzerland by the net tax rate approved by the Swiss federal tax authorities. The net tax rates consider the input tax amounts usual in the relevant sector of the industry. They are fixed by the Swiss federal tax authorities after consultation with the industry association concerned. Authorization to report under the net tax rate method must be requested from the Swiss federal tax authorities and the method must be used for at least one tax period.
Flat tax rate scheme. In principle, the flat tax rate method is similar to the net tax rate method but may be applied only by public authorities and related institutions, in particular private hospitals and schools or licensed transport undertakings and associations and foundations.
Margin scheme. A VAT margin scheme is applicable to supplies of works of art, antiquities and collector’s items. In general, if the taxable person has acquired collectibles such as works of art, antiques and the like, it may deduct the purchase price from the sales price in order to calculate the tax, provided that it has not deducted any input tax on the purchase price (margin tax). If the purchase price is higher than the selling price, the loss can be offset by subtracting the difference from the taxable turnover. If such collector’s items are imported by the reseller, the paid import tax may be added to the buying-in price.
Notional input tax deduction. A taxable person may deduct notional input tax if it acquires an individualizable movable good during a business activity entitling it to input tax deductions; and the VAT on the acquisition of the good has not been openly passed on to the business.
Supplementary filings. Annual turnover and input tax reconciliation. The preparation of an annual turnover and input tax reconciliation is a mandatory requirement in Switzerland. This document, however, does not, have to be filed as such to the SFTA. If discrepancies are revealed further to the filing of a VAT return, a finalization form (or corrective returns) must be filed.
Correcting errors in previous returns. If a taxable person discovers errors in their tax returns in the course of drawing up their annual accounts, it must correct them at the latest in the so-called finalization return to be filed online within 180 days after the end of the relevant business year and within the return settlement deadline in which the 180th day falls.
Digital tax administration. There are no transactional reporting requirements in Switzerland.
J. Penalties
Penalties for late registration. Taxable persons should be registered with the federal tax administration in writing within 30 days after the commencement of their tax liability or 60 days for persons who become taxable solely because of the acquisition tax. The amount of the fine varies depending on the circumstances but should not exceed CHF10,000.
Penalties for late payment and filings. Late payment interest at a rate of 4.75% per annum may be assessed for the late payment of VAT. For one-off cases with no recurring intentions, a maximum penalty of CHF10,000 may be charged per incompliance.