Switzerland: Development in VAT in digital and global economy

Bern, June 19, 2020 – At its meeting on June 19, 2020, the Federal Council opened a consultation on the partial revision of the VAT law. Among other things, he suggests taxing mail order platforms extensively and simplifying billing for SMEs. The proposal also implements further parliamentary proposals.

Since the last VAT revision (entry into force in 2019), foreign mail order companies have to register with the Swiss Federal Tax Administration (FTA) if they achieve sales of over CHF 100,000 in Switzerland with small consignments (VAT amount below CHF 5). It has been shown that the effect of this measure is limited, since numerous foreign online mail order companies have not registered as persons subject to VAT. Operators of mail order platforms are now to declare and tax all deliveries of goods that are processed via their platform and arrive in Switzerland. The FTA should have administrative measures to enforce the new rules if mail order platforms or companies have wrongly not registered or they fail to meet their billing and payment obligations. It may prohibit imports of supplies from the company concerned or the destruction of the objects. To protect customers, it can also publish the names of the companies against which such measures are applied.

The Federal Council proposes further simplifications in VAT accounting for SMEs and relief for VAT-liable foreign companies in order to facilitate law-abiding behavior. In addition, the concept of subsidy should be brought into line with the concept of subsidy that is used outside of VAT law.

The template implements three motions in the areas of managed care services, active participation in cultural events and monthly hygiene products.

To prevent fraud, the purchase tax obligation is to be introduced domestically for the transfer of emission rights, certificates and certificates for emission reductions, guarantees of origin for electricity and similar rights, certificates and certificates. Until this legal provision comes into force, the notification procedure will be prescribed by means of an amendment to the regulation. With these two measures, Switzerland is fulfilling obligations to the EU under international treaties. Finally, the submission provides for a measure to combat fraudulent series bankruptcies.

Source Credit – Michaela Merz

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