Switzerland: Possible revisions of VAT law include measures affecting electronic platforms

Revisions of the Swiss Value Added Tax (VAT) Act approved by the National Council

Revisions of the Swiss Value Added Tax (VAT) Act approved by the National Council

The National Council recently approved revisions of the Swiss value added tax (VAT) law, described below.

If the revisions are administratively approved, a public referendum may take place. Therefore, the earliest the revision of the VAT law might be effective is 1 January 2024.

Electronic platforms

Under new Article 20a, any electronic platform would become subject to Swiss VAT. Per the proposed changes, online platforms themselves would be treated as suppliers. Consequently, suppliers would be deemed to make a "VAT-exempt" sale to the platform, and the platform would be treated as selling the products to the customers. This means that platforms, rather than the sellers, would collect VAT from customers. Any person who renders services that consist of connecting sellers and buyers on the platform would be treated as an electronic platform.  

The law would not be applicable to the supply of electronic services through the online platform.

Nevertheless, non-taxable sales by private individuals and non-taxable businesses would now be subject to VAT if carried using an electronic platform. 

Trading in emission and similar rights

The reverse-charge mechanism for trading in the emission and similar rights in Article 1 para. 1 no. 2. lit. b VAT Act has been approved. This creates the legal basis to implement the Federal Supreme Court decision from 2019 under which emissions trading must be made subject to VAT. According to the decision, the transfer of emission rights, certificates and attestations for emission reductions, guarantees of origin for electricity and similar rights would become subject to acquisition tax in Switzerland regardless of whether the supply is made by a domestic or a foreign company. 

Fiscal representation and annual VAT reconciliation

Under new provisions, the tax representative would need to be deleted from the Swiss business identification number (UID) register no later than 30 days after the notification of the withdrawal of the mandate as tax representative to the Federal Tax Administration (FTA). The taxpayer would need to appoint a new tax representative within 30 days of the notification and notify the FTA. If the taxpayer fails to appoint a new representative, the FTA could initiate tax safeguarding measures. However, the representation would not be required for companies with an annual turnover from taxable supplies in Switzerland below CHF 250,000.

In addition to satisfying the above-mentioned procedural obligations, the taxable person without a domicile or place of business in Switzerland would need to confirm annually within the time limit of 180 days after the end of the relevant business year or at the time of deregistration the completeness and adequacy of the submitted statements of account for the tax period of the previous year.

Import VAT deferral

Art. 63 para 1 VAT Act would be revised to implement the import VAT deferral regime which means that the tax due on the import of goods may be declared within the periodic VAT return filed with the FTA instead of paying it. This revision would be applicable for the importer who is VAT registered in Switzerland only.

Other revisions

Supplies by hospitals, centers for medical treatment and diagnostic centers, patient clinics and day clinics would be VAT-exempt. In addition, services of coordinated care including purely administrative services would also be VAT-exempt. 

A reduced tax rate of 2.5% would apply to menstrual hygiene products.

Read a June 2022 report prepared by the KPMG member firm in Switzerland

 

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