On 30 September 2016 both chambers of the Swiss Parliament approved the partially revised VAT Act. It will go into effect on 1 January 2018. Here is a short overview of the new applicable rules:
- New is that exemption from tax liability is granted to those whose total annual revenue, both Swiss and global revenue, amounts to less than CHF 100,000 per year. The determination of the registration threshold of CHF 100,000 therefore not only considers domestic revenue, but all revenue taken in annually worldwide. This new rule shall reduce the competitive advantage foreign companies have had when doing business in Switzerland from a foreign base. In principle, these new requirements mean that all who provide goods and services domestically in return for payment are taxable. From now on a company will be deemed subject to VAT, unless it can prove with its books, that globally the threshold of CHF 100,000 is not exceeded. This revision is also important for Swiss companies that up to now have not attained any or very little revenue in Switzerland, but have earned high amounts of taxable revenue abroad. These companies will also now be taxable for low revenues attained in Switzerland.
- New is obligatory subordination for domiciled companies abroad that attain CHF 100,000 revenue from non-taxable imports sent to recipients in Switzerland. Vendors benefitting from the import tax exemption for business to customer sales of products of minor value from outside Switzerland into Swiss territory, have to register and pay Swiss VAT if they derive an annual turnover of more than CHF 100'000 from these sales. The "international vendor" therefore becomes a Swiss VAT subject and will have to charge Swiss VAT on sales to Swiss customers.
- It will be possible to opt for voluntary payment of VAT on exempt turnover by way of declaration with Federal Tax Authorities. So far this option has had to be shown on bills issued to clients. With the new act this disclosure will no longer be mandatory.
- A new reduced VAT rate of 2.5% will also be applicable for newspapers, magazines and electronic books. Equal treatment of printed and online medias will be guaranteed.
There are a number of other articles that have been modified in the new VAT Act. It is worthwhile to examine these carefully to determine whether any changes or adjustments need to be made. We would be pleased to assist you with this process.
