Switzerland

VAT Basics

VAT Rates in Switzerland

Similarly, certain supplies are VAT exempt. For example, certain health services, financial services, insurance, education and training, certain cultural services, supplies connected with immovable property, etc. These are regulated under Art. 21 Swiss VAT Act. Taxpayers may opt to tax some of the exempt supplies without credit from Art. 21 (Art. 22 Swiss VAT Act).

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VAT Deduction Limits in Switzerland

Input VAT is generally deductible as long as the goods or services are used for business purposes.

However, there are special rules:

• Exempt transactions: Supplies of services and imports of goods used for the supply of services that are VAT exempt do not allow for the deduction of input tax, unless the taxable person has opted for their taxation (Art. 29 Swiss VAT Act.). Another exception would be in case the
• Passenger car used both for private and business purposes: Initially, all input VAT can be deducted via the VAT return; however, the taxable person must account for the VAT corresponding to the private use of the car and petrol in the last VAT return of the year. In case the taxpayer is involved in exempt transactions, fully or partially, no input VAT deduction is allowed.
• Holding participations.

A valid and fully compliant VAT invoice must be issued for each expense on which VAT is deducted.

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Statute of Limitations in Switzerland

The statute of limitations is five years in Switzerland, although this period can be interrupted both by the taxpayer and by the administration. A written request, ruling, decision or the start of an audit can interrupt the statute of limitations. The absolute period of the statute of limitations cannot exceed ten years from the end of the tax period in which the tax point took place.

When it is the taxpayer who interrupts the statute of limitations, then the statute of limitations runs again for five years, whereas in case it is the tax administration who interrupts it, it runs again for two years.

The statute of limitations period determines the periods on which the tax authority can go back to review the information declared, and apply additional VAT assessments, penalties or interests.

The statute of limitations also determines the period a taxpayer can voluntarily correct any errors on past submissions, as well as deduct input VAT.

This is regulated in Art.42 and Art.91 of the Swiss VAT Act.

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Tax Point Rules in Switzerland

The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.

• General rule: The tax point is by the time of issuing the invoice.
• Partial payments: Tax point is considered to have occurred by the time of issuing the partial invoice, or by the time of receiving the partial payment.
• Advanced payments: The tax point takes place by the time the payment is received.
• Self-supplies: the tax point is by the time the self-supply takes place.
• Import: Tax point occurs when the goods are imported according to the relevant import documents.

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VAT Registrations and Simplifications in Switzerland

When Do I Need a Swiss VAT Number?

Generally, a foreign business must register for VAT (Value Added Tax) in Switzerland as soon as a taxable supply is made, and the exemption threshold is exceeded. The following are the usual examples of taxable transactions:

• Domestic supply of goods: A supply of goods located in Switzerland where the reverse charge does not apply.
• Supply of services not reverse charged: Foreign non-established businesses supplying services on which Swiss VAT is due by the supplier must register for VAT.
• Imports of goods in Switzerland: When a non-established trader imports goods under his or her own name, a VAT registration may be required in Switzerland.
• Export: Exporting goods to another country requires a VAT number before the export is made.
• Mail-order companies: Foreign suppliers selling low-value consignments and reaching the annual threshold of CHF 100,000 need to register for Swiss VAT, and start importing the goods (still exempt) and charge Swiss VAT on the sale to Swiss customers. Low-value consignments are deemed to be those where the import VAT would be less than CHF 5 (i.e., depending on the VAT rate, if the goods are taxed at 8,1%, these are goods of a value up to CHF 62, whereas if the goods is subject to 2,6%, these are goods of a value up to CHF 193). Low-value consignments are exempt from import VAT.

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Generally, companies must submit and apply for VAT registration before performing any of the above taxable transactions. However, both established and non-established companies can benefit from a VAT registration exemption threshold ranging from CHF 100,000 to CHF 250,000:

• The general exemption threshold is CHF 100,000.
• For non-profit, voluntary sports or cultural clubs or non-profit institutions, the relevant threshold is CHF 250,000.

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As of 2018, the exemption threshold became global. Consequently, foreign companies must consider the worldwide annual turnover, and not only the turnover related to supplies in Switzerland. In practice, this means that most foreign businesses making taxable transactions located in Switzerland will need to register for VAT, whereas Swiss-established businesses are more likely to benefit from the exemption threshold. This rule does not apply to online sellers making low-value consignment shipments to Switzerland, because in such case the CHF 100,000 threshold is considered only based on the turnover generated from those supplies in the country.

In any case, voluntary VAT registration is allowed. Companies that are not liable have the right to voluntarily register, and once opted in, the option must be kept for at least a calendar year (tax period). Similarly, companies involved in exempt supplies may voluntarily register and opt to tax their supplies. See also the Section about special VAT schemes.

Backdated registrations are allowed in Switzerland. You will need to regularize past reporting periods as from the registration date.

Foreign suppliers VAT-registered in Switzerland must charge VAT on all supplies located in the country.

• Check here and here the official information about VAT registration in Switzerland.
• Find here more information about the VAT treatment of mail-order sales.
• The official Swiss VAT manual also includes the list of information required to provide for the VAT registration.
• Find here more information about the voluntary VAT liability in Switzerland.
• Also, find here, and here more information about the exemption threshold for VAT registration.

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Fiscal Representative Requirements in Switzerland

Some countries require foreign companies to appoint a fiscal representative when registering for VAT. This is the case for Switzerland. Some key considerations:

• The fiscal representative must have its place of residence or business in Switzerland.
• The tax representation is not liable for the VAT debt.
• Having a fiscal representative in Switzerland does not constitute a permanent establishment for VAT purposes.

This is regulated under Art.67 of the Swiss VAT Act. Also, find here additional information from the official VAT guide, and here more information about the liability of the fiscal representative. Also, under this link there is a note for foreign companies.

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VAT Groups in Switzerland

Where more than one taxable person established in Switzerland are closely related, these companies can create a VAT group and be treated as a single taxable person for VAT purposes in Switzerland.

VAT grouping is possible only for businesses established or with a fixed establishment in Switzerland. Group members are closely related where one or more persons are controlled by the same entity (direction unique).

In addition, the following VAT grouping rules apply in Switzerland:

• VAT grouping is optional in Switzerland and, once is formed, the group members are treated as a single taxable person.
• Non-taxable persons like holdings can be part of a VAT group. Also, when it comes to having a domicile or establishment in Switzerland, it shall be considered that entities based in the Principality of Liechtenstein cannot be part of a VAT group.
• Once the application to register as a VAT group is confirmed, the VAT group shall normally start by the beginning of the next reporting period. Backdated registrations may be possible provided that any of member of the group has submitted a VAT return for the period.
• Intra-group transactions are disregarded for VAT purposes.
• Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
• The minimum period a VAT group can exist is one year.
• A single VAT return must be submitted for the entities of the group.

VAT groups are regulated under Art.13 of the Swiss VAT Act. Also, find here the official information about VAT groups.

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Swiss Bad Debt Relief

Bad debt refers to an unpaid invoice for which the Supplier has paid the VAT to the tax administration: this is, an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer. This is often due to the client´s bankruptcy, insolvency or simple missed payments to suppliers. In these cases, most countries offer the possibility to recover the VAT initially paid to the authorities, however, the conditions vary from one country to another.

Bad debt relief refers to the possibility of recovering the VAT from that invoice. Switzerland allows for bad debt relief. The condition is that the debt is written off in the accounts and it is booked as a bad debt from an accounting perspective.

There are no other particular rules apart from the accounting principles. Therefore, the taxable amount shall be reduced according to the VAT corresponding to a bad debt by way of correcting the payable VAT in the corresponding VAT return.

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Swiss Import Deferral and Postponed VAT Accounting

Switzerland has introduced the postponed import VAT accounting mechanism but only for those taxpayers subject to a special VAT scheme known as méthode effective.

Separately, Switzerland has also introduced an import VAT deferral simplification which allows the postponement of the payment of import VAT up to 60 days. There is a deferral simplification for import VAT known as a ZAZ account. This simplification can only be used by regular importers, and it is subject to approval from the Customs administration. The ZaZ account means that the importer does not have to pay VAT to release the goods, instead, the Customs will charge the import VAT to the ZaZ account (VAT and import duties).

To set up the ZaZ account, the taxpayer must apply for this simplification and set up a bank guarantee or deposit with the Customs authority as beneficiary.

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Swiss Customs and VAT warehouses

Read more about Customs warehouses.

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Special VAT Schemes in Switzerland

Businesses may benefit from the following special VAT regimes:

• Small business VAT exemption: There is a VAT exemption applicable to all companies in Switzerland that do not exceed the annual turnover of CHF 100,000 or other applicable threshold. Find here additional information.
• Net Tax Rate scheme ‍: This is a simplification scheme that consists of calculating the VAT liability by applying an official net tax rate to the total taxable supplies of the period. The net tax rates are determined based on the sector. It applies to taxable persons that do not exceed CHF 5.02 million turnover on an annual basis and do not have to pay more than CHF 108,000 for VAT. The reporting is made twice a year. Find here additional information.
• Farmers: The supply of agricultural products under certain conditions is exempt.
• Travel agents: There is no margin scheme for travel agents.
• Margin scheme: There is margin scheme for trade in works of art, antiquities and collectors items.
• Cash accounting. Art.39.2 Swiss VAT Act.Find additional information

Have a look at our website articles about TOMS and the Cash Accounting Scheme.

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Reverse Charge in Switzerland

Reverse Charge for Non-Established Companies in Switzerland

Switzerland has introduced reverse charge on certain supplies:

• Supplies of services performed by a non-established and not VAT registered Supplier that are taxable in Switzerland. The only exceptions are the telecommunication and electronic services B2C, which are subject to Swiss VAT if the Supplier exceeds the CHF 100,000 threshold.
• The import of data storage media without market value with the services and rights included therein.
• Supplies in connection with immovable property located in Swiss territory made by non-established and not VAT-registered Suppliers.
• Supplies of electricity and gas via the distribution networks, and district heating by businesses established abroad. The place of supply is determined by where the recipient of these supplies is established or, in the absence of such establishment, where they are consumed.

Important remarks concerning the reverse charge mechanism in Switzerland:

• Foreign suppliers VAT-registered in Switzerland must charge VAT on all supplies located in the country. Reverse charge may only apply in the above scenarios provided that the foreign supplier is not VAT registered in Switzerland.
• In Switzerland, there is no distinction between B2B and B2C supplies. So reverse charge may apply regardless of whether the supply is B2B or B2C if the rest of the conditions are met. Exceptions are telecommunication and electronic services B2C, as well as the supply of electricity, gas, and district heating.

This is regulated under art.45 Swiss VAT Act.

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Reverse Charge on Specific Goods and Services in Switzerland

Reverse charge is never applied if the supplier is a resident person.

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VAT Returns in Switzerland

Frequency of VAT Returns in Switzerland

The standard frequency of filing of the periodic VAT returns is the quarter. However, upon request, the Swiss tax authorities may authorize a monthly reporting frequency for certain taxpayers that are consistently in a refund position. Also, small businesses under special VAT scheme submit the returns every six months (méthode des taux de la dette fiscale nette).

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Due Date of Swiss VAT Returns

The VAT returns in Switzerland must be submitted within 60 days after the end of the reporting period.

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Due dates

General deadline: By the last day of the second following month.

Find here more information about the applicable deadlines.

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VAT Payments in Switzerland

VAT payments in Switzerland must be made by bank transfer.

• Beneficiary: Federal Tax Administration FTA
• Address: 3003 Bern- PostFinance, Bern
• IBAN: CH60 0900 0000 3000 0037 5
• BIC (Bank Identifyer Code): POFICHBEXXX

Have a look here and here at the information about how to pay taxes in Switzerland.

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VAT Refunds in Switzerland

The excess of input VAT is automatically refunded to the taxpayer within 30 days. This is, when a taxable person declares more VAT deductible – e.g., due to purchases-, than VAT collected from sales, the difference is a VAT credit which shall be reimbursed to the taxpayer.

To correctly receive the VAT refund, the tax authorities must have the right information about the taxpayer’s bank account.

Before the VAT refund, the tax authorities may carry out an audit of the information reported in the VAT return.

If the excess of input VAT claimed via a VAT return is not paid our later than 60 days after the receipt of the VAT return, the VAT credit will increase from the 61st day with interests.

Check here for more details about VAT refunds. Also, see Art.88 Swiss VAT Act.

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Nil and Corrective VAT Returns in Switzerland

A nil VAT return needs to be submitted even if there are no transactions to be reported for that period.

Errors or omissions in a VAT return must be corrected, even if they do not impact the VAT position for the corresponding period. You will need to submit a corrective return which shall replace the initial return submitted using the corresponding corrective return form (décompte rectificatif de la période considérée). The corrective VAT return replaces the previous return submitted for the same period in full. This means that the corrective return must include all details that were already correct in the original return as well as the corrected details. Additionally, if there is additional output VAT you must proceed with the VAT payment immediately.

Although an annual VAT return does not exist in Switzerland, if errors are detected during the reconciliation of the annual accounting a corrective return must be submitted. The deadline for correction reporting (applies to all reporting methods) is 240 days after the end of the financial year in question (calendar year). If no adjustment statement has been received after 240 days have passed since the end of the relevant financial year, the tax authority assumes that the VAT statements submitted by the taxpayer are complete and correct and the tax period has been finalized.

• Interest is due on the subsequently declared tax amount if the tax amount is paid after the expiry date of the tax period in question.
• When submitting a corrective VAT return, penalties and interest may apply.
• The general deadline to make corrections on previous reporting periods is 5 years.

Find here, and here the official instructions about making corrections to VAT returns. This is regulated under Art. 72 Swiss VAT Act.

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VAT Penalties in Switzerland

Interest is applied if you do not pay VAT on time. It is charged on a daily basis from the date the VAT payment is due until you pay the amount outstanding. From 1 January 2024, the interest on arrears rate is 4,75%.

This interest on arrears apply to your quarterly or bi-annual returns, supplementary returns, regularization in case of backdated registration or corrective returns after the year end’s accounting closure.

The default interest is generally calculated based on the average deadline. In this case, interest is calculated from October 16 (in case of quarterly frequency), from December 1 (in case of half-yearly frequency) and from September 16 (in case of monthly frequency) until time of payment according to the commercial interest method (rule 30/360).

Additionally, penalties can arise if you do not pay VAT on time, or you do not comply with your reporting obligations. Particularly, when it is appreciated a deliberate or negligent behavior from the taxpayer. Fixed penalties are usually established at a maximum amount of CHF 800,000.

When the taxpayer refuses to pay the VAT due after receiving the corresponding warnings, the tax authorities will initiate the collection proceedings:

• The prosecution is carried out by way of seizure.
• No deadline extension can be granted once the prosecution procedure starts.
• After the seizure has been performed, the debt collection or bankruptcy office may provide an additional deadline so the taxpayer may agree on the payment of the tax due in installments.

Learn more about the late payment interest and collection measures in the official article published by the Swiss authorities. Also, this is regulated in Art. 87Swiss VAT Act.

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Swiss Tax Authorities Contact

Contact VAT: You will finde here the contact form to use.

Customs client administration - UID

Website and contact form

Phone: +41 58 463 76 40

Customs - Federal Office for Customs and Border Security (FOCBS)

Website: https://www.bazg.admin.ch/bazg/en/home.html

Phone: The call center is available from Monday to Friday from 8 am to 11.30 am and from 1.30 pm to 5 pm: +41 58 467 15 15

Contact form