Insights

Restructuring is part of everyday business life. The notification procedure makes it possible to handle certain transfers of assets in a VAT-efficient manner without triggering unnecessary liquidity pressures. However, correct application requires that the legal and time-related requirements are identified and met at an early stage.

A VAT Health Check ensures that a company’s value-added tax obligations are correctly fulfilled and associated compliance risks are minimized. The analysis identifies potential weaknesses in VAT processes and classifications, offering opportunities to optimize and reduce risks while achieving more efficient tax management.

From 1 January 2025, online platforms will be obliged to register for value added tax (VAT) in Switzerland and Liechtenstein if small consignments worth at least CHF 100,000 are sold to domestic customers via their platform within one year. This registration obligation also applies if the platform does not act as a seller itself, but merely brings buyers and sellers together. The aim of the tax obligation is to ensure that sales to domestic customers are taxed correctly and do not remain untaxed.

On 1 January 2025, the partially revised value added tax (VAT) law will come into force. The administrative practice associated with the changes to the law and ordinances is still largely undefined, which is why many details regarding practical implementation are still open and require individual clarification. The changes to VAT affect both national and international companies operating in Switzerland and Liechtenstein. The changes are significant as they not only have an impact on tax liability, but may also entail administrative requirements and financial consequences.

The Federal Supreme Court has clarified in two recent rulings that financial transfers within the same municipality are not to be classified as subsidies. Based on these rulings, municipalities should review how such financial transfers are treated for VAT purposes and assess the potential impact of this new VAT classification on their autonomous departments.

As you know, new VAT rates have been in force since January 1, 2024. These are: standard VAT rate 8.1 % (previously 7.7 %), reduced rate 2.6 % (previously 2.5 %) and special rate for accommodation services 3.8 % (previously 3.7 %) as well as various changes under the net tax rate and lump-sum tax rate regime. In many cases, a VAT rate change is unproblematic and is implemented to the extent that the VAT rates on the invoices are adjusted. However, there are also constellations that are not quite so easy to handle and have different accounting and contractual effects depending on the specific case.

Switzerland abolishes the industrial tariffs in chapters 25–97 of the customs tariff. However, agricultural and fishing duties (in chapters 1–24) and duties for some goods classified as agricultural products (in chapters 35 and 38) remain in place.

Registration for VAT and submission of the VAT returns via the e-portal of the Federal Tax Administration will become mandatory from 1 January 2024. In addition, a one-year transition period will be granted.

Based on a people’s decision of 25 September 2022 the Swiss VAT rates are going to be increased. The increase of the VAT rates is planned to become effective as from 1 January 2024.

The right to deduct import tax is subject to certain legal requirements. In addition, the company must be able to document a claimed import tax deduction. However, despite the principle of free assessment of evidence, not every document related to an import is suitable for proving the claim to an import tax deduction in a legally adequate manner.

If the employer provides its employee with a business vehicle, which the employee may also use privately, this is deemed to be a supply that is provided by the employer. This supply is subject to the standard VAT rate and must be declared accordingly in the VAT return of the employer.

VAT is first and foremost a tax and contributes to the financing of government tasks. On closer inspection, however, certain procedures and precautions in the field of VAT have a positive effect on the available liquidity by reducing unnecessary liquidity commitment from a business management point of view. The notification procedure for import tax is used to illustrate the effect of certain VAT arrangements.

Cross-border e-commerce: Tax-efficient and customer-friendly delivery process to Switzerland A VAT guide to cross-border e-commerce for foreign web shops