Value-Added Tax (VAT) Rules in Switzerland for European Businesses: Register Foreign Company for Swiss VAT, Declare, Pay, Claim Back and Get a Refund of Swiss VAT

Last update: 2 December 2023

Start VAT Registration of a Swiss or Foreign Company

Introduction into Swiss VAT

Consumption Tax

In essence, the Swiss value-added tax (VAT) is a consumption tax. It taxes non-entrepreneurial end-consumption within Switzerland at the standard Swiss VAT rate of 7.70%.

Foreign businesses and companies subject to Swiss VAT must appoint a Swiss VAT agent or fiscal representative.

Swiss VAT Liability of Swiss and Foreign Companies

1. VAT Liability of Swiss Companies

Companies in Switzerland with an annual turnover above CHF 100,000 (tax subjects) must register with the Swiss Federal Tax Administration FTA (here) and file quarterly VAT returns within 60 days (here) after the end of each quarter. In the event of late submission of the Swiss VAT declaration, default interest of 4% is due.

You can find more information about Swiss VAT liability in general under this link (here).

Payment of the tax liability must equally be made within 60 days after the end of a quarter.

On the other hand, the credit balance, if positive, is paid out by the Swiss authorities within 30 days after the FTA receives the VAT statement from the taxpayer.

2. VAT Liability of Foreign Companies

Since 2018, foreign businesses with a global turnover of CHF 100,000 that provide (e-)services in Switzerland are subject to Swiss VAT (official guidance here). This new regime was put in place in order to create a level playing field among Swiss and foreign companies making supplies in Switzerland.

More background on the obligation of foreign companies to pay Swiss VAT is available under this link (here).

The following services provided by foreign companies are typically subject to Swiss VAT:

• Installation services in Switzerland (e.g. a French painter works on a flat in Cologny, a German company cleans a house in Basel, an Italian electrician installs a washing machine in Locarno)
• Catering services in Switzerland
• Cross-border passenger transport toward Switzerland (only buses, taxis, shuttles)
• E-services to private persons in Switzerland (e.g. sale of apps, software downloads, online games)
• Performances in Switzerland (athletes, sports teams, artists, events)

3. Swiss Fiscal Representation of Foreign Companies

Foreign companies without a place of business or permanent establishment in Switzerland must be represented by a Swiss VAT representative ("fiscal representative") established in Switzerland. A foreign company must state the Swiss tax representative when registering for VAT online. Registration without a Swiss tax representative is impossible.

On the other hand, foreign companies providing exempt services in Switzerland or services subject to the services import tax ("Bezugsteuer") are not subject to tax.

The VAT representative in Switzerland of a foreign company subject to Swiss VAT performs these duties:

• It accepts correspondence and forwards it to the foreign business without delay
• It acts as the Swiss Federal Tax Administration's (FTA) contact partner
• It gives access to its premises for carrying out VAT audits
• It provides access to the documents requested by the FTA

In addition, since 1 January 2019, low-value goods (below CHF 65) sent to Switzerland from abroad are no longer VAT-free (official guidance here). Accordingly, foreign companies with a turnover of CHF 100,000 from low-value consignments sent to Switzerland must equally register for VAT in Switzerland.

> Astrantia Consulting charges a flat fee of EUR 3,000 per year for fiscal representation of foreign companies subject to Swiss VAT.

How much Are the Swiss VAT Rates?

(last update July 2023)

How much are the current Swiss VAT rates?

Switzerland and Liechtenstein currently levy a standard VAT rate of 7.70% ("normaler Satz"), a special rate of 3.70% ("Beherbergungssatz", mainly for accommodation services), and a reduced VAT rate of 2.50% ("reduzierter Satz", mainly in the area of food, medication, newspapers and digital print media).

These Swiss VAT rates apply to (i) the supply of goods and services within Switzerland and Liechtenstein which form a common VAT zone - Swiss Output Tax (here) and (ii) the import of goods into Switzerland - Swiss Import Tax (here) and the import of services into Switzerland - Swiss Reverse Charge (here).

The Principality of Liechtenstein has adopted the Swiss VAT law while having its own VAT administration.

How much are the new Swiss VAT rates?

In the past, Switzerland has often increased VAT to finance government spending (e.g. railway projects, disability insurance). In 2022, the Swiss government introduced a new VAT rate increase in order to finance its pension system. The tax increase will come into force on 01.01.2024 (here).

During the transition period, the date of effective supply will be the decisive factor ("tax point") in order to determine whether the old Swiss VAT rate (7.70%) or the new Swiss VAT rate (8.10%) applies.

In the case of continuous supplies (e.g. software licences, newspaper subscriptions) extending over both periods, the VAT must be apportioned pro rata temporis to both periods (that is, to 2023 and 2024 respectively). In practice, this will result in invoices displaying both VAT rates in the same document, but accruing to different periods.

Tax exemptions

The export of goods and services from Switzerland or Liechtenstein is tax-exempt (what is decisive is the foreign invoice address of the recipient of the goods or services).

Exceptions

The following sales in Switzerland are exempt from Swiss VAT:

• Education and training
• Cultural services
• Fees for sporting events
• Insurance
• Money and capital transactions
• Turnover (rent) and sale of land and property
  

Which Categories and Types of VAT Exist in Switzerland?

Swiss Input and Output Tax

Swiss companies registered for VAT are thus liable for VAT on goods and services provided to Swiss clients (so-called output tax or "Umsatzsteuer") and incur (but can deduct) VAT on goods and services received from domestic suppliers (input tax or "Vorsteuer").

For their part, these Swiss companies must pay VAT on goods and services they purchase from Swiss suppliers or service providers (so-called input tax or "Vorsteuer"). However, the input tax can then be reclaimed from the Swiss Federal Tax Administration (FTA) on a quarterly basis.

Typology of Swiss Value Added Tax

• Output tax (from the point of view of the invoicing party, that is, sales in Switzerland = debt to the FTA)
• Input Tax (1170) receivable on cost of material, goods, services, energy (from the point of view of the invoiced party, that is, purchases in Switzerland = claim against the FTA)
• Input tax (1171) receivable on investments and other operating expenses
• Import tax (import of goods into Switzerland from abroad)
• Reverse charge (import of services into Switzerland from abroad)

Goods Import Tax in Switzerland ("Einfuhrsteuer")

In Switzerland, VAT on imports, also called goods import tax, is collected by the Federal Customs Administration (FCA) based on the invoice price plus the transportation costs up to the Swiss place of destination.

The Swiss value-added tax on the import of goods (here) is primarily aimed at making sure that Swiss companies importing foreign goods do not pay less tax than those buying local products.

Services Import Tax in Switzerland (reverse charge or "Bezugsteuer")

The Swiss services import tax ("Bezugsteuer") is levied on the import of services into Switzerland. It makes sure that there is a level playing field between domestic and foreign service providers and that Swiss service providers are not at a competitive disadvantage.

The services import tax is levied on the importation of foreign services into Switzerland based on the service recipient principle ("Empfängerortprinzip"), that is, the place of a service is normally deemed to be the domicile of the service recipient.

Generally, most services follow the service recipient principle, in particular:

• Foreign advertising services (e.g. Google Ads)
• Assignment and granting of intangible rights (e.g. the use of a Microsoft license)
• Services from foreign consultants, asset managers, trustees, lawyers, etc.
• Foreign management services
• Foreign data processing services
• Foreign telecommunications or electronic services (telephony, internet, roaming, Internet television, providing websites, web hosting, etc.)
• Staff leasing from abroad

In fact, the Swiss services import tax is often a zero-sum game, as the declared tax can be deducted directly as input tax ("Vorsteuer") in the same quarter. Nevertheless, a correct declaration is important to avoid unnecessary questions in the event of a Swiss VAT audit (here).

Swiss Radio and Television Fee

Since 1 January 2019, Swiss businesses with a global turnover above CHF 500,000 are subject to the Swiss Radio and TV Fee between CHF 160 and CHF 49,925 based on the previous year's turnover.

The current tariff categories for the Swiss ratio and TV tax are available under this link (here).

Penalties

Tax evasion entails fines of up to five times the tax evaded. For other VAT violations fines of up to CHF 100,000 apply.

Where to Find the Swiss VAT Number?

Swiss Company Identification Number

The official VAT number of a Swiss company has the following format: CHE-187.974.011 (CHE187974011 is also acceptable).

This so called UID or "Unternehmens-Identifikationsnummer" (here) serves at the same time as the Swiss company's official registration number. It can be found in the Swiss Central Business Name Index under this link (here).

The UID consists of nine numbers, is randomly allocated and does not contain any information about the enterprise (thus, it is an anonymous number).

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Useful links

Urs Denzler, Britta Rehfisch, Roger Zbinden, veb.ch (2022) Das Lehr- und Praxisbuch zur Schweizer Mehrwertsteuer (here)

Schweizer Steuerkonferenz SSK (2019) Grundsätze der Mehrwertsteuer (here)

Swiss VAT Act (here)

Swiss VAT Ordinance (here)

Swiss Federal Tax Administration, Swiss Value Added Tax VAT (here)

Swiss Federal Tax Administration, Submit VAT online (here) [select LOGIN mit Account]

Swiss Federal Tax Administration, Current Swiss VAT rates (here)

Swiss Federal Tax Administration, Deadlines for the settlement of Swiss VAT (here)

Swiss Federal Customs Administration, Average monthly exchange rates per currency and year (here)