VAT plus GmbH is a Swiss based legal consultancy firm that is spezialised in VAT, customs law and international trade law. VAT plus focuses on foreign companies that have business activities in or that touch Switzerland and in that scope are looking for legal support in the field of indirect taxation and affiliate international trade law areas.
Due to its international background, VAT plus is familiar with the international setting in which foreign companies operate. VAT plus has a strong focus on compliance, i.e. enabling companies to meet their day-to-day indirect tax compliance.
The rules for Swiss VAT liability apply to domestic and foreign companies alike. Only in a very limited number of situations foreign companies are excluded from the standard regulation.
When performing in Switzerland supplies of goods or certain types of services, foreign companies that do not need to register or do not want to opt for registration should keep in mind that generally they cannot claim VAT refund (regulation for claiming VAT refund by foreign companies).
Swiss VAT compliance assumes planning. Regardless whether a foreign company acts as supplying or as buying party, the company must have timely knowledge about the correct Swiss VAT treatment. None-compliance with the rules causes additional costs and often frustrates customer relationships. Regularly, not sooner than when trying to file their Swiss VAT refund request foreign companies become aware that they do not entitle to refund and/or are liable for Swiss VAT.
By determing the correct VAT treatment before engaging in sales or buying contracts it can be prevented that Swiss VAT becomes a cost.
Invoicing with Swiss VAT is a privilege. Namely, only companies that have been assigned a Swiss VAT number are entitled to charge Swiss VAT. Companies that charge Swiss VAT although they do not have (yet) a Swiss VAT number can face liabilities that go beyond the tax amount only.
Foreign companies that think they are or may become liable for Swiss VAT must adopt their billing practice to Swiss VAT rules during the period that the Swiss VAT number has been applied for but not yet has been assigned.
Instruction work (without import of goods) can induce a Swiss VAT liability of a foreign company. Although under certain conditions a reverse-charge like mechanism applies, a registration is necessary when the threshold of CHF 100’000 is exceeded.
Architecture type services, including interior design, rendered by a foreign company in connection with real estate located in Switzerland will trigger its Swiss VAT liability under the standard rules. Below the threshold for compulsory liability a voluntary registration is possible.
Below the threshold for compulsory VAT registration, foreign companies that supply goods, which are coming from abroad and are installed by them or for their account, to customers in Switzerland, will have to take specific compliance rules for VAT/customs treatment at the Swiss border into account.
Commercial reasons may move a foreign company to register voluntary for Swiss VAT in order to be able to act as local distributor (or retailer) on the Swiss market. When registering, the foreign company should also apply for a so-called subordination license.
Special tools, that in the scope of the fulfillment of an engagement are purchased by, manufactured by or on behalf of a taxable person, qualify as part of the supply of the goods that have been made with these tools. When goods, produced with special tools, are exported and such export is covered by a zero rate, then the zero rate also applies to the special tools.
Basically, companies with their business establishment outside Switzerland are exempted from VAT liability when they only make supplies that are subject to VAT on acquisitions.
A company, with its business establishment outside Switzerland, that makes domestic supplies of goods -that are subject to the VAT on acquisitions- will become liable for VAT when the threshold (CHF 100’000) has been exceeded.
Basically, in order to be entitled to VAT refund, the foreign company, or the third party that has been commissioned by it, may not make domestic supplies in Switzerland. However, exceptions to this rule are transport of goods when subject to a zero rate, supply of services that are taxed at the place where the recipient resides and are subject to Swiss VAT on acquisitions, and supplies due to (own) guarantee obligations.