SwitzerlandManual

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.

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.

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, here, and more information about the exemption threshold for VAT registration.

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.

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 you will find the following note for foreign companies:

Foreign taxable companies without a residence, place of business or permanent establishment in Switzerland must be represented by a representative established in Switzerland. A natural or legal person with a residence or place of business in Switzerland is recognized as a tax representative. As such, the representative does not necessarily have to be a trust company, a lawyer or a member of a certain professional group – it can also be a private individual. When registering for VAT online, a foreign company must specify the tax representative. Registrations without a tax representative are not possible.

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.

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.

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.

Swiss Customs and VAT warehouses

Read more about Customs warehouses.

Special VAT schemes in Switzerland

Businesses may benefit from the following special VAT regimes:

  1.    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.
  2.    Net Tax Rate scheme (NTDR): 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.
  3.   Farmers: The supply of agricultural products under certain conditions is exempt.
  4.  Travel agents: There is no margin scheme for travel agents.
  5.  Margin scheme: There is margin scheme for trade in works of art, antiquities and collectors items.
  6. Cash accounting. Art. 39.2 Swiss VAT Act. Find additional information here.

Have a look at our website articles about TOMS and the Cash accounting scheme.

 

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