Switzerland VAT Guide

Administration fédérale des contributions AFC
Division principale de la TVA

Amministrazione federale delle contribuzioni AFC
Divisione principale dell’imposta sul valore aggiunto
Schwarztorstrasse 50
CH-3003 Bern

Switzerland

Suppose the taxable person discovers errors in their statements when preparing the annual financial statements. In that case, they must correct these with a corrective statement no later than in the statement for the period in which the 180th day since the end of the financial year in question falls.

If the correction is only made at the time of finalization with the correction statement (annual reconciliation), interest on arrears is owed. This is calculated according to the due date of the relevant tax period (generally 60 days after the end of the tax period or February 28 of the following year) up to the time of payment using the commercial interest method (30/360 rule). However, if the amount of interest does not reach CHF 100, no interest on arrears is generally charged.

Credit balances of the taxable person are paid out or offset against any tax liability. The credit balance is paid out 30 days after the FTA receives the statement. Interest is charged if payment is made at a later date

The deadlines for declaring and paying VAT may be extended by three months after the due date.

You can apply under certain circumstances for a declaration on a monthly, semester or yearly declaration.

·       The reduced tax rate of 2.6 percent applies:

On the supply of the following goods:

•  Water in pipes,
• Foodstuffs in accordance with the Foodstuffs Act of June 20, 201454, with the with the exception of alcoholic beverages,
• Livestock, poultry, fish,
• Cereals,
• seeds, seed tubers and bulbs, live plants, cuttings,
• cuttings, grafts and cut flowers and branches, also for arrangements,
•  bouquets, wreaths and the like; provided that a separate invoice is issued, the supply of these items is subject to the reduced tax rate even if is also subject to the reduced tax rate if it is provided in combination with a supply taxable at the standard rate,
• Animal feed, silage acids, animal bedding,
• fertilizers, plant protection products, mulch and other plant covering materials, medicines, Newspapers, magazines, books and other printed products without advertising character
• advertising nature of the species to be determined by the Federal Council;
• on electronic newspapers, periodicals and books of a non-advertising nature of the types to be determined by the Federal Council;
• on the services of radio and television companies, with the exception of services of a commercial nature;

On the services referred to in Article 21 paragraph 2 clauses 14-16 Swiss VAT LAW;

• services in the field of agriculture that are directly related to the cultivation of the soil or the cultivation of land that is directly related to primary production or the processing of products of primary production associated with the soil.
• The standard rate of 8.1% applies to foodstuffs supplied as part of catering services. The supply of food is deemed to be a catering service if foodstuffs if the taxable person prepares them on the customer’s premises or prepared or served at the customer’s premises or if the taxable person provides special special facilities for their consumption on the spot. If foodstuffs, with the exception of alcoholic beverages, are intended for take-away or delivery, the reduced the reduced tax rate of 2.6% applies, provided that suitable organizational measures have been taken to distinguish these services from catering services; otherwise the standard rate of 8.1% applies. If food, with the exception of alcoholic beverages, is offered in vending machines, the reduced tax rate of 2.6% applies.
• The tax on accommodation services is 3.8 percent (special rate). As accommodation service is the provision of accommodation including breakfast, even if this is charged separately.

Business is operated by anyone who:

·       independently pursues a professional or commercial activity aimed at the sustainable generation of income from services, irrespective of the amount of the inflow of funds that are not deemed to be remuneration in accordance with Article 18 paragraph 2; and

·       appears to the outside world under his own name.

The acquisition, holding and sale of participations constitutes an entrepreneurial activity, which is why a voluntary tax liability is possible and advisable.

The following are exempt from tax registration obligation

a.     generates less than CHF 100,000 turnover within one year in Switzerland and abroad from supplies that are not exempt from tax;

b.     operates a company with its registered office, domicile or permanent establishment abroad that exclusively provides one or more of the following types of services in Switzerland, irrespective of turnover:

1.     supplies exempt from tax,

2.     supplies exempt from tax,

3.     services where the place of supply is determined by the place-of-receipt principle and is located in Switzerland according to this place-of-supply definition; however, anyone who supplies telecommunications or electronic services to non-taxable recipients is not exempt from tax,

4.     the supply of electricity in lines, gas via the natural gas distribution network and district heating to taxable persons in Switzerland;

5.     as a non-profit, voluntarily run sports or cultural association or as a charitable organization, generates less than CHF 250,000 turnover within one year in Switzerland and abroad from services that are not exempt from tax.

Turnover is calculated on the basis of the agreed remuneration excluding tax.

The domestic registered office and all domestic permanent establishments together form one taxable entity.

1.     for companies with their registered office, domicile or permanent establishment in Switzerland: upon commencement of the business activity;

2.     for all other companies: when a service is first provided in Switzerland

1.     the goods are located at the time of the acquisition of the right to dispose of them commercially, the delivery or the transfer for use or utilization;

2.     the transportation or dispatch of the goods to the customer or to a third party on his or her behalf begins.

The place of supply of electricity in lines, gas via the natural gas distribution network and district heating is deemed to be the place where the recipient of the supply has the registered office of the economic activity or a permanent establishment for which the supply is made or, in the absence of such a registered office or such a permanent establishment, the place where the electricity, gas or district heating is actually used or consumed.

In the case of the supply of goods from abroad to Switzerland, the place of supply is deemed to be in Switzerland, provided that the supplier

1.     has authorization from the Federal Tax Administration (FTA) to import the goods in his own name (declaration of subordination) and does not waive this authorization at the time of importation; or

2.     with goods that are exempt from import tax due to the negligible tax amount (CHF 5) and thus generates a turnover of at least CHF 100,000 per year

• The transfer of the power to dispose of a good commercially in one’s own name commercially in one’s own name
• Sale of goods or property, transactions on a commission basis
• the delivery of a good on which work has been performed, even if the good is not altered by the work, but only tested, calibrated, regulated, checked for its function or has been treated in another way,
• making a good available for use or exploitation (e.g. leasing or rent)
• Definition of supply of services: Every supply that is not a supply of goods

·       failing to declare all income in a tax period, over-declaring income from services exempt from tax, failing to declare all expenditure subject to purchase tax or over-declaring expenditure entitling to input tax deduction;

·       obtains an unlawful refund; or

·       obtains an unjustified tax remission.

The fine is up to CHF 800,000 if the tax evaded in the cases referred to in paragraph 1 is passed on in a form (e.g. by means of an invoice) that entitles the person concerned to deduct input tax.

A fine of up to CHF 200,000 shall be imposed on anyone who reduces the tax claim at the expense of the state by truthfully declaring the factors relevant to the tax assessment but incorrectly qualifying them for tax purposes, provided that he deliberately fails to correctly apply clear statutory provisions, instructions issued by the authorities or published practice and does not inform the authorities of this in writing in advance. In the event of negligence, the fine is up to CHF 20,000.

A fine of up to CHF 800,000 is imposed on anyone who reduces the tax claim at the expense of the state by intentionally or negligently failing to declare or incorrectly declaring or concealing goods on importation or intentionally providing no, false or incomplete information when requested to do so as part of an official inspection or an administrative procedure aimed at determining the tax claim or waiving the tax.

Even an attempt is punishable.

If the tax benefit is obtained due to an incorrect statement, tax evasion is only punishable if the deadline for correcting errors in the statement has expired and the error has not been corrected.

The proof of entrepreneurial status issued by the foreign tax authority must be valid for the refund period (calendar year).

When a reciprocal right is given and the country has a VAT system, the proof of entrepreneurial status must always:

• confirm that the applicant is registered for VAT during the period for which the VAT refund is claimed; or
• indicate the date on which the applicant was entered in the register of VAT payers.

If a reciprocal right is given and the country does not have a VAT system the proof of entrepreneurial status must always:

• confirm the entrepreneurial status during the period for which the VAT refund is claimed; or
• indicate the date on which the applicant obtained entrepreneurial status.

If the aforementioned conditions are not met, the FTA will not be able to process the application nor refund the Swiss VAT.

The list of the countries you find at the end of this guide.

a.     the domestic tax invoiced to him;

b.     the purchase tax declared by it ;

c.     the import tax paid or payable by it, which has been assessed with an unconditional claim or which has been assessed with a conditional claim and has become due, as well as the tax declared by it for the importation of goods.

If the taxable person has purchased agricultural, forestry or horticultural products, livestock or milk from non-taxable farmers, foresters, gardeners, livestock dealers and milk collection centers as part of his business activity entitling him to deduct input tax, he may deduct 2.6 % of the amount invoiced to him as input tax

The deduction of input tax is permitted if the taxable person can prove that they have paid the input tax.

The taxable person may deduct a notional input tax if:

·       it purchases a customizable movable item as part of its business activity that entitles it to deduct input tax; and

·       no VAT is openly passed on to them when they purchase the item.

The notional input tax is calculated on the amount paid by the taxable person. The amount paid by the taxable person is inclusive of tax at the rate applicable at the time of purchase.

there is no entitlement to input tax deduction for supplies and for the importation of goods that are used for the provision of supplies that are exempt from tax and for the taxation of which no option has been opted.

Input tax can be deducted for supplies made abroad to the same extent as if they had been made in Switzerland and could have been opted for.

Input tax can be deducted for travel services resold by travel agencies and the associated travel agency services if they are provided or used abroad.

However, there is a right to input VAT deduction for the acquisition, holding and sale of participations and for restructuring within the scope of the business activity entitling to input VAT deduction.

Participations are shares in the capital of other companies which are held with the intention of permanent investment and which convey a significant influence. Shares of at least 10 percent of the capital are deemed to be participations.

Holding companies may base the calculation of deductible input tax on the business activity of the companies they hold that entitles them to deduct input tax

However, there is a right to input VAT deduction for the acquisition, holding and sale of participations and for restructuring within the scope of the business activity entitling to input VAT deduction.

3 Participations are shares in the capital of other companies which are held with the intention of permanent investment and which convey a significant influence. Shares of at least 10 % of the capital are deemed to be participations.

4 Holding companies may base the calculation of deductible input tax on the business activity of the companies they hold that entitles them to deduct input tax

·       Trade fair costs (Exhibitors)

·       Participation costs for international conferences, seminars etc., which are not public (participant)

·       Accommodation services (max. 30 days)

No refund of VAT on:

·       Travel expenses,

accommodation and meals

·       Telephone charges

·       Taxi costs

·       Fuel