Value-Added Tax Obligations for Foreign Companies
By Sandrine Bonvin, Bonnefous & Cie SA
Until 2015, companies with headquarters in a foreign country and which booked business in Switzerland had no obligation regarding value-added tax (VAT).
The following article only concerns transactions subject to acquisition tax. A company may have to announce to the Federal Tax Authority because of taxable transactions according to the Swiss VAT Law (LTVA), even if those transactions are not subject to acquisitions tax (for instance: furniture of services related to a real estate property).
The original ordinance
Up until 31 December 2014, all foreign companies furnishing and delivering goods and services subject to acquisition tax were exempt from paying VAT (as per article 10. Al. 2 let. B LTVA). It was the responsibility of the receiver of goods and services furnished or delivered by foreign companies to pay VAT on those goods and services.
Revision of the ordinance as of 1 January 2015 relating to the supply of goods
Since 1 January 2015, foreign companies, which furnish and deliver goods in Switzerland and are subject to acquisition tax, must pay VAT if they generate revenues of more than CHF 100,000.
In practice, a foreign company has the obligation to announce to the Federal Tax Authority if they fulfil the following conditions:
- The company furnishes and/or delivers goods in Switzerland, which are subject to acquisition tax (note: the notion of delivery as it concerns value-added tax includes provision of goods or any other kind of work realised in relation to goods).
- Minimum limit: annual revenues of CHF 100,000 generated in Switzerland including both goods and services together.
Foreign companies with the obligation to pay value-added tax in Switzerland must also designate a fiscal representative in Switzerland. Moreover, the foreign company must either furnish a guarantee obtained from a bank in Switzerland in the form of an obligation unlimited in time, or make a security deposit in cash.
For information purposes, it is important to emphasise that the fiscal representative assumes all responsibility regarding the payment of VAT in Switzerland, apart from fiscal debts and their reimbursement.
Furnishing of services
However, companies with headquarters in a foreign country, which exclusively furnish services on Swiss territory and which are subject to acquisition tax, are still exempt from paying value-added tax.
In this case, it is the receiver of services from a foreign company who is subject to paying VAT on the services acquired.
The notions of acquisition tax and taxable transactions according to the Swiss VAT Law are very complex. We recommend that foreign companies call on a Swiss VAT expert who will be able to secure their projects regarding VAT.
Published: September 2017 l Photo: R.Babakin - Fotolia.com