In principle, foreign companies that generate turnover in Switzerland are not liable for Swiss VAT.
There is, however, an exception since January 1, 2015 relating to foreign companies that deliver goods in Switzerland, subject to acquisition tax. This condition, put in place to mitigate the competitive advantages in favor of foreign companies, is undergoing a new development provided for by the revision of the VAT Law from 1 January 2018.
Foreign companies and VAT liability: the rules
Any business headquartered abroad must register for VAT in Switzerland if it meets the following conditions:
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Supply of goods subject to acquisition tax
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Annual worldwide turnover greater than or equal to CHF 100,000.-, from the 1st franc in Switzerland
Delivery means rental and any other type of work on a property. Movable property, real estate, electricity, gas and other similar assets are concerned.
Examples of deliveries of goods:
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Sale of newspapers, medicines or drinks
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Car rental
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Repair of a watch
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Checking the operation of a machine
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Gardening and cleaning work
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…
Foreign companies that were subject to VAT in Switzerland mustalsoappoint a tax representative in Switzerland. This tax representative – who can be a natural or legal person – undertakes, among other things, that the VAT statements are transmitted and paid on time to the Federal Tax Administration. He must also keep all the documents relating to the tax declarations of the foreign taxable person.
In addition, foreign companies subject to VAT must provide security, in the form of a joint and several guarantee unlimited in time and issued by a bank located in Switzerland or provide a deposit in cash.
The revision of the VAT law, which entered into force on January 1, 2018, notably involves changes in the VAT liability of foreign companies. All services provided in Switzerland, from this date, are subject to VAT if the worldwide turnover of the company reaches CHF 100,000.- annually.
Another measure resulting from the revision of the VAT law impacts foreign companies in the online sales sector, as of January 1, 2019. This measure concerns the sending of goods whose value does not exceed CHF 5.- of VAT. Market players whose sales will exceed CHF 100,000.- will all have to be subject to VAT as of January 1, 2019.
Tax
Tax on acquisitions: instructions for use
Certain services provided by foreign companies are subject to acquisition tax. These are the services:
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subject to the principle of the place of the recipient
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supplied on Swiss territory
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taxable in Switzerland
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provided by a foreign company that is not registered in the register of VAT taxable persons
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Persons subject to VAT in Switzerland have the obligation to declare the benefits acquired from abroad, meeting the criteria listed above.
With regard to persons not registered for VAT in Switzerland, if they acquire for more than CHF 10,000.- per year of:
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Provision of services in Switzerland from foreign companies, not registered for Swiss VAT
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Imported data carriers without commercial value
They must declare themselves to the Federal Tax Administration within 60 days of the end of the calendar year during which the acquisition took place.
In the case of deliveries not subject to import tax, in excess of CHF 10,000.-, the persons who acquire them – not subject to VAT – must notify the AFC if the competent tax authorities have informed them of their acquisition tax liability.