On 2 June 2017, the Swiss Federal Council decided that the partially revised Value Added Tax Act adopted by the Swiss Parliament would come into force on 1 January 2018. The revised Value Added Tax Act will help remove VAT-related competitive disadvantages for domestic companies.
According to the amendments, a company’s global turnover instead of its turnover in Switzerland will be decisive for mandatory tax liability. Companies with a global turnover level of least CHF 100,000 will have to pay VAT from the first franc of their turnover in Switzerland. Previously, foreign companies could provide their services in Switzerland without paying VAT, if their turnover did not exceed the level of CHF 100,000. Thus Swiss businesses suffered competitive disadvantages, especially in the border regions.
However, there will be a delay of one year for the mail-order regulations, which will not come into force until 1 January 2019. Consequently, mail-order companies will be liable for tax from 2019, if their annual turnover from import-tax-free small consignments is at least CHF 100,000. Such mail-order companies will themselves bill customers for VAT. In return, customers will no longer have to pay the taxes and fees levied by the Customs upon importation. As a result, the VAT-related competitive disadvantages for domestic companies will be reduced. The reduced VAT rate for electronic newspapers, magazines and books, margin taxation for collectors’ items as well as all other changes will enter into force on 1 January 2018.
For Switzerland, the mentioned amendments will lead to a total increase in receipts of an estimated CHF 70 million p.a. The most relevant financial implication is that global turnover will be used for tax liability. This measure alone will lead to an increase in receipts of an estimated CHF 40 million p.a.