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Partially revised VAT Regulation enacted in Switzerland

On 18 October 2017, the Swiss Federal Council passed the partially revised Value Added Tax Regulation (hereinafter “VAT Regulation”). It contains adaptations to the partially revised VAT Act (hereinafter “VAT Act”) and other point-to-point changes. Both documents will enter into force on 1 January 2018 with the exception of the provisions on mail order trading.

A positive change is that the administrative burden is reduced. Thus, companies do not have to register as taxable persons with the Federal tax Administration, if they provide only tax-exempt services in Switzerland.

The regulation also defines electronic newspapers, magazines and books, which will become tax-deductible. They must fulfil essentially the same function as printed editions. The purpose is that newspapers, magazines and books can take advantage of the reduced rate regardless of their publication form.

Furthermore, the Regulation determines which collector items, such as works of art, antiques and the like, shall be subject to margin taxation. Margin taxation should be applicable to everything that can be traded in the field of fine arts. This means that VAT is also neutral for the art trade, without causing the disadvantages of fictitious tax deductions, which can lead to systematic under-taxation in the field of art.

It should also be noted that the Regulation contains clarifications on settlements with VAT net and flat rates.