New E-commerce VAT Rules in Switzerland

As the digital landscape continues to evolve, Switzerland is gearing up for significant amendments to its VAT system, particularly in the e-commerce. The update of the Swiss VAT law will take effect on January 1, 2025. Among the changes, the spotlight is set on e-commerce regulations.

Current E-commerce Rules in Switzerland

Currently, distance sellers conduct transactions via electronic platforms as disclosed agents, therefore, they assume the role of suppliers even though the sale takes place through an online marketplace.

A special VAT regime applies to distance sales considered as low-value consignments in Switzerland:

• 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.
• Also, there is an annual turnover exemption, according to which only those foreign suppliers selling low-value consignments and reaching the annual threshold of CHF 100,000 need to VAT register in Switzerland, start importing the goods (exempt), and charge Swiss VAT on the sale to customers in Switzerland.

Deemed Supplier Role of E-commerce Platforms Rules by 2025

The revised Swiss VAT law will introduce key changes for e-commerce, notably:

• Introducing the deemed supplier concept: Electronic platforms facilitating goods transactions will be deemed suppliers unless specific conditions are met. These conditions range from non-involvement in ordering goods to solely processing payments, reshaping the dynamics of supply chains. According to the deemed supplier scheme:
  • a first delivery takes place between the seller of the good and the operator of the platform;
  • a second delivery takes place between the operator of the platform and the buyer of the good, subject to Swiss VAT.
• Obligation to Provide Information: Electronic platforms will be mandated to furnish information upon request by the Swiss Federal Tax Administration (SFTA), enhancing transparency and compliance.

You may find here the official information.

Implications for E-commerce Platforms

A digital platform is defined as an electronic interface that facilitates interaction between two or more users online intending to supply goods.

By January 2025, sales of goods made via a digital platform will, if conditions are met, make the marketplace liable for VAT on that supply. This means that it is the marketplace or digital platform, and not the seller, who will collect VAT from the final client and transfer that VAT amount to the tax authority. In this case, Sellers who supply goods via a digital platform shall be liable on a subsidiary basis.

Digital platforms shall not be considered the deemed supplier if one or more of the following conditions are met:

• The platform is neither directly nor indirectly involved in the ordering process.
• The platform does not generate turnover directly related to the business.
• The platform only carries out the payment processing in connection with the supply.
• The platform only provides space for advertisements.
• The platform only provides advertising services.
• The platform only redirects or forwards purchasers to other electronic platforms.

Also, certain platforms may still be exempt from collecting VAT, including where the seller is exempt from VAT or where the transaction volume does not exceed the CHF 100,000 threshold for small businesses.

The deemed supplier clause for VAT in e-commerce is already applicable in other countries, such as the EU Member States and the UK.

These updates aim to improve VAT compliance, streamline the process for businesses, and ensure the VAT system is better equipped to handle the challenges posed by digital transactions. By placing more responsibility on digital platforms and modernizing administrative procedures, Switzerland seeks to maintain a fair and efficient VAT system for all taxpayers.

How can Marosa help you?

At Marosa we stay up to date with all the latest legislative changes to ensure our clients remain fully compliant with their tax obligations. Our team of experts is dedicated to providing tailored solutions, guiding you through complex VAT regulations.

Marosa can also assist with VAT registrations and VAT compliance in multiple countries, optimizing compliance and efficiency.