Swiss VAT Tax and Foreign Mail Order Companies
This article explains the Swiss value added tax (VAT) regulation regarding foreign mail order companies that send parcels into Switzerland - and how the process works.
Mandatory Swiss VAT Registration
In short: A foreign mail order company that sends parcels into Switzerland must mandatorily register for Swiss VAT if the value of all small parcels sums to more than CHF 100'000 per year. A parcel is considered small if its value is below CHF 61.73 (normal VAT rate 8.1% as at 1 January 2024; or CHF 192.31 at the reduced VAT rate of 2.6%).
Small Parcels
For efficiency purposes, the Swiss Customs do not levy import VAT on imported small parcels. A parcel is considered small if the VAT amounts to less than CHF 5.001. The result is that foreign mail order companies that send small packages into Switzerland have a competitive advantage over local businesses, because the consumer does not pay VAT.
In order to mitigate this issue, the VAT law stipulates that if a foreign company sends many small parcels into Switzerland, it must pay VAT on them. The threshold is an aggregated CHF 100'000 of small parcels in a year. If a foreign company is above this threshold, then it is mandatory to register for Swiss VAT (VAT law article 72).
For the determination of the parcel value, the total price the customer pays is relevant. And this includes shipping costs if the customer pays it.
The 5 CHF VAT threshold price at the regular VAT rate of 8.1% is CHF 61.73. If 8.1% VAT is levied on CHF 61.73, it results in exactly CHF 5.00 of VAT.
The reduced VAT rate of 2.6% is applicable to some goods like books. But most goods are taxable at the regular VAT rate. Switzerland also has a third VAT rate of 3.8%, but this is only for accommodation services and not relevant for parcels.
If a foreign only company sends larger parcels into Switzerland, then import VAT is levied on them when crossing the border. Such companies do not have to register for Swiss VAT.
VAT Representation
If a foreign company registers for Swiss VAT, it must name a local tax representative (VAT law article 672).
eVV (Electronic Import Assessment)
The Customs Office will created an eVV when goods are imported into Switzerland. The eVV contains information about the assessment of import VAT as well as other import duties.
Import Process Using Swiss Post Without VAT Registration of the Sending Company (Default Case)
The most simple way to send parcels to Switzerland is by using the regular postal system. In Switzerland such parcel will be processed by Swiss Post. Swiss Post will do the import processing as well as the delivery within Switzerland.
If the Swiss Post determines that a package will result in more than CHF 5.00 of VAT, it will process the package for import VAT.
The Swiss Post will mark the recipient of the parcel as the importing person in the tax assessment and bill the recipient for VAT and an additional handling fee of CHF 16.003
The recipient will pay directly to the mailman upon delivery, or he can pay online if he has registered with Swiss Post. And he will pay, because otherwise he will not receive the package.
If the recipient is a business and is registered for VAT, then it can reclaim the import-VAT given certain other conditions are met. Private consumers are never able to reclaim VAT.
For a business to reclaim the VAT, the eVV (electronic import assessment) is needed. Swiss Post will make it available in an electronic form. The receiving person will receive a physical invoice from the Swiss Post with the package. And on this invoice, there is a code with which the eVV can be electronically downloaded from the website of Swiss Post.
Importing Process Using Swiss Post if the Foreign Company is VAT Registered in Switzerland
If the sending company is registered for VAT in Switzerland, then Swiss Post treats the parcels differently.
Small parcels will continue not to be processed. Parcels above the threshold will be processed, but the VAT will be billed to the sending company and not the recipient. The recipient will nevertheless receive an invoice from the Swiss Post for the handling fee.
The Swiss Post will write in the eVV the foreign business as the importing person. It will later on enable the foreign business to reclaim the VAT from the government using the eVV.
For this process to work, the Swiss Post lists multiple requirements4,5:
- The foreign business must register with Swiss Post
- All parcles must have on the outside the foreign business' name as well as the Swiss VAT Number (but no address - otherwise the package might be sent to the wrong location)
- Each parcel requires a CN22/23 declaration
- A VAT-compliant invoice or proforma invoice showing the Swiss VAT and Swiss VAT Number in a pouch on the outside of the consignment
More details are available from the Website of the Swiss Post.
The Swiss Post is not capable of processing collections of individual packaged items as one import. The Swiss Post will generate an eVV for each parcel and will charge the handling fee for each parcel.
Importing Process Using Other Carriers
One of the big disadvantages of regular Swiss Post is that they are unable to process collections of individual parcels as one import. This makes buying parcels above the VAT free threshold expensive for customers in Switzerland, as they will always receive an invoice for at least handling fee of CHF 16 from the Swiss Post.
The collective importing is not possible according to the World Post Tready6.
Other transportation companies that do not use Swiss Post for the import processing might be able to offer better terms. Especially processing of multiple parcels as a collection can significantly lower the handling costs.
The Federal Tax Authority also maintains a list of all foreign mail order business that are VAT registered in Switzerland6. The list is available here. Making sure the foreign business is on this list, will help that the Customs Authorities will process the parcels correctly.
Voluntary Registration for Swiss VAT
A foreign mail order company can voluntarily register for Swiss VAT.
Using Swiss Post two things change for the customer in Switzerland:
- For packages below the value threshold: Additional VAT must be paid to the foreign business upon purchasing
- For packages above the value threshold: Additional VAT must be paid to to the foreign business upon purchasing. And the invoice from Swiss Post will be lower by that amount. But the customer still received an invoice with a handling charge of at least CHF 16 from Swiss Post.
Using Swiss Post, there is not much reason to opt for voluntary VAT registration. There are no benefits to the foreign company and no benefits to the customer in Switzerland.
Let's assume another carrier is used for the import processing. If the other carrier offers collective importing of individual parcels, then the handling fee could be significantly cheaper per parcel. And let's further assume that the carrier bills the foreign mail order company for it. And the foreign company is willing to pay for it, because it has already charged the Swiss customer a bit more shipping fee.
This setup is beneficial to the customer, because he does not have to pay the expensive handling fee from Swiss Post.
Collective importing might also be possible without VAT registration in Switzerland, as long as the sending company is willing to pay the VAT bill.
Also in the second scenario, the benefits of voluntarily registering for Swiss VAT are dubious. The administrative overhead of Swiss VAT will likely overshadow any small benefit it might create.
ZAZ Account at Swiss Customs
For each import, the Customs Authority will generate an eVV. Costs arising from an assessment must be charged to a ZAZ account (centralized billing procedure customs account).
Each transport company that imports goods into Switzerland maintains a ZAZ account. The Swiss Post also maintains one.
If a transport company presents the Customs Authority with a parcel for import, then it must also tell the Customs Office which ZAZ to use. The ZAZ will be billed for the import costs arising from the parcel. The corresponding eVV generated by the Customs Office will also be linked to that ZAZ account.
If the transport company uses its own ZAZ account, then the transport company will pay the import charges and will be able to access the eVV on its ZAZ account. The transport company then has to bill either the recipient of the package or the sender to recover the costs. It will also have to download the eVV using its ZAZ account and forward it to either the recipient or the sender.
A foreign business can also open an own ZAZ account in its name.
The foreign business must then instruct the transport company to use that ZAZ account number. And the transport company will forward it to the Customs Office. If everything works out, then the Customs Office will charge the ZAZ account of the foreign business directly. And the foreign business can later on download the eVV using its own ZVV account.
The ZAZ account number has no protection. That means that an owner must periodically check whether any costs were charged to it by mistake. A typo in the ZAZ number of some random transport company can be enough to cause a mistake.
An owner of a ZAZ account can sign in on the website of the Customs Office and download the eVV. Alternative ways of accessing the eVVs are also possible. There is also special software on the market that makes downloading many eVVs more time efficient.
It should be possible to download up to a few hundred eVV per month manually from the Customs Office Website ( see the following video up to 1:00, each eVV has to be selected manually, but can then be bulk downloaded YouTube Video ).
eVV Revisited
The eVV consists of 3 files: xml, pdf and an additional xml file. These 3 files are all for import VAT. There might be an additional 3 files for other import duties.
In the standard case of Swiss Post and no VAT registration of the sending company, the Customs Office will write the recipient of the package in the "importer" field of the eVV. The recipient will receive an invoice from Swiss Post and pay the VAT. If the recipient is a business, it can use the eVV to reclaim the VAT from the Swiss tax authorities.
In the case of Swiss Post and VAT registration, then the Customs Office will write the foreign business into the "importer" field of the eVV. The Swiss Post will bill the foreign company for the VAT. And the foreign business can then use the eVV to reclaim the VAT.
If another transport company is used for the importing, then it is important to make sure that whatever formal process they use, is in line with the expectations of the tax office. Otherwise the risk of non-reclaim-ability of the paid import-VAT can arise. This can result in double payment of Swiss VAT (see chapter on VAT declaration).
VAT Tax Declaration
The VAT tax declaration must in most cases be done quarterly.
The tax form has three sections:
- Top: Revenue / 1.081 * 0.081 = VAT payable (all parcels whether small or large)
- Middle: Minus already paid import VAT (only larger parcels, small parcels are normally not taxed on import)
- Bottom line: a payable amount (that can in theory correspond to the VAT on all small parcels, because it's not yet paid)
The standard case for the middle line is to use eVV. The eVV must have in the "Importeur" field the company written that is making the VAT reclaim. If eVVs are used and this is not the case, then it must be checked with the transportation company and the tax authorities whether the VAT reclaim is acceptable. Taking a risk is not worth it.
The middle lines also permit tax conform invoices to be used for VAT reclaim. Again, it must be made sure, that the invoices indeed are by substance and form acceptable to the tax authorities for tax reclaim.
Every few years there can be a tax inspection. If a tax inspector finds mistakes, he will charge the foreign business for the missing taxes. The duty of proof for the VAT reclaim lies with the company making the reclaim. The inspections occur usually every 4-5 year, just before the right of the tax office to levy taxes expires. This also means, that the VAT declaration remain unchecked by the tax authorities for that many years before they become final.
Documentation for the VAT Declarations
The declaration form is designed to cover the worldwide turnover of the company. But for foreign companies the Swiss VAT Office makes an exception and permits the declaration of only the revenue within Switzerland.7
But the tax office reserves the right to inquire about worldwide revenue7. In some cases revenue or subsidies abroad can lead to a reduction of the VAT reclaim quota to below 100%. That would mean that the foreign business would not be able to reclaim 100% of otherwise reclaimable VAT, but only a proportion of it. And the tax office would want to be able to verify that this was not the case.
The documentation should include at least:
- A detailed list of all Swiss revenue (meaning recipient name, address, amount, amount/rate VAT shown to customer, date, ...)
- All documents used for VAT reclaim (eVVs, received invoices, in some important cases documentation of payment of invoices ...)
- Supporting copies of available customer documents (e.g. ideally an invoice with all details - otherwise order confirmation, proforma invoices etc.)
If eVVs are used, then it should be possible for a selection of sample cases to tell which customer orders belong to which eVV and the other way around. It is very likely that this link can be established by using the name, address, date and amount from the list. If collective import processing is used, then an additional list might be needed that links the customer order to the eVV.
Our Service
If you have any questions, please do not hesitate to contact us.
We offer initial VAT consulting, fiscal representation and (quarterly) filling of the VAT declaration forms.
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Author: Raffael Neeser