Swiss VAT Tax and Foreign Companies (Switzerland)

The business must have:

• revenue with "place of supply in Switzerland",
• or a registered office, domicile or permanent establishment on Swiss territory1.

If neither is the case, then the business is not mandatory subject to Swiss VAT.

To have revenue with place of supply in Switzerland, a business must have customers in Switzerland or do some work that is somehow related to Switzerland. But not every customer in Switzerland translates to "place of supply in Switzerland".

There are basically two places involved in each transaction: where the goods or service are coming from, and where the customer is located. The Swiss VAT Act defines which of the two places must be used as "place of supply" for goods in article 7, and for services in article 8. Please note that the place of supply is an artificial definition in the VAT Act and will often not be intuitive.

Place of supply of goods (VAT Act, article 7)

• The general rule for supply of goods is that the place of supply is the place where2:
  1. "the good is located at the time of transfer of the power to dispose commercially of it, of its delivery or of its being made available for use or exploitation;"
     Example: if you transfer goods to Switzerland and carry out work on them in Switzerland before you hand it over to the customer (meaningful assembly work, installation), the place of supply is in Switzerland.
  2. "the transport or dispatch of the good to the customer or to a third party on his instructions begins."
     Example: you send goods to Switzerland from abroad on the instructions of the customer and nothing more, the place of supply is where the journey starts, meaning abroad.
• Therefore, a business that only sends goods to Switzerland will not become subject to Swiss VAT due to missing supplies with place in Switzerland. An exception is many small deliveries to Switzerland: see Mail-Order Business below.
• Other exceptions exist for electricity, (natural) gas and district heating.

Place of supply of services (VAT Act, article 8)

• As a general rule (article 8 paragraph 1), the place of supply for services is where the recipient is located. That means, that most types of services provided from abroad to Swiss customers have their place of supply in Switzerland. But there are some exceptions to that general rule listed in paragraph 2 of article 8.
• The exceptions listed in paragraph 2 include services that are fulfilled in person (e.g. hairdresser, hospitality, passenger transportation etc.) as well as some other special cases. The paragraph 2 often says, that the place of service is where the person producing the service currently is. A notable special case is anything related to a specific real estate in Switzerland, which is said to always have a place of service withing Switzerland, regardless where the person producing the Service is located and where the recipient is.

Please note, the distinction what is considered as goods and what as services does not always match other countries' VAT laws. For example, differences may exist in the treatment of assembly work on imported goods, renting contracts etc.

A company is not mandatory subject to Swiss VAT if the worldwide turnover is below CHF 100'000 after deducting any tax-exempt sales listed in the Swiss VAT Act article 213.

This article contains a long list of tax-exempt types of sales (e.g. certain medical services, certain financial services, etc.). Most revenue types are not tax-exempt, article 21 lists the exceptions rather than the norm. Nonetheless, the list is long. There are other lists of not-taxable items in the VAT Act, but for the condition here, only article 21 is relevant.

If the worldwide turnover is below CHF 100'000 to start with, then any turnover after deducting something will also be below CHF 100'000. That would mean that the company is not mandatory subject to VAT.

If the worldwide turnover is above CHF 100'000, then it depends on what kind of turnover it is.

For this condition, only revenue with a "place of supply" in Switzerland is relevant. Supply here means both, supply of goods, and supply of services.

A foreign business in not subject to Swiss VAT if all of the revenue with a place of supply in Switzerland belongs to one or more of the categories listed below4.

These categories are:

• Tax-exempt revenue according to the VAT Act article 215
• Tax-free revenue according to the VAT Act article 23 (not the same as article 21 above). The article 23 lists many items that are related to exporting products or service from Switzerland to abroad.
• Revenue from services which:
  • have their place of supply in Switzerland according to article 8 paragraph 1 (see above). That means all services provided to customers in Switzerland, that are not listed as exceptions in article 8 paragraph 2.
  • AND are not telecommunication or electronic services delivered to recipients in Switzerland who are not subject to VAT
• Delivery of electricity, gas, or district heat over pipes to recipients in Switzerland that are themselves subject to VAT.

This condition is rather complicated. It can only be reliably checked by going through each type of revenue the business has and making sure that all of them match at least one of the above categories. If an item is found that does not belong to the list above, the business will become subject to Swiss VAT, given the other conditions are also met. Even one very small item is enough. The found item is likely to also be taxable.

When checking the business' types of revenue against the detailed lists and text of the VAT Act, often, additional literature will need to be consulted as the VAT Act leaves room for interpretation. For example, what is considered to be a telecommunication or electronic service (mentioned above)?

Additional literature for consultation includes:

• The VAT ordinance (MWTV)
• The collection of tax administration practice (VAT Info, not available in English)

Especially the extensive VAT-Info with its detailed and longer discussions of specific issues, will help in reaching a conclusion. And if the question is still not answered with sufficient certainty, one might go the way of asking the tax administration for their opinion or even ask for a tax ruling ahead of time.