VAT Registration in Switzerland
Businesses starting or expanding into Switzerland must register from the outset if they anticipate meeting the VAT registration threshold within a year. This applies universally, irrespective of location. If they unexpectedly surpass the threshold within a year, registration from the next year’s start is mandatory.
While VAT registration usually covers all company activities, public entities can choose to register specific divisions.
Read all about VAT registration in Switzerland in our comprehensive guide.
Register for VAT in Switzerland
When a business anticipates reaching the registration threshold within 12 months either at the time of commencing its business activity or expanding it to Switzerland, it is required to register from the beginning or expansion of its business activity. This registration threshold is applicable to all businesses, regardless of their place of residence. If the registration threshold is surpassed within a year, the business is obligated to register from the beginning of the following year. This situation occurs when it was unforeseeable at the time of commencing or expanding the business activity that the threshold would be exceeded. Typically, VAT registration encompasses the entire business activity of a company. However, public or municipal bodies have the option to register discrete divisions if they choose to do so.
Registration, Generally
Businesses that are located outside of Switzerland are obligated to register for VAT and have the choice to register under the same conditions as businesses based within Switzerland. Consequently, registration is typically compulsory if the business engages in supplies within Switzerland and its taxable turnover of supplies reaches or surpasses the specified registration threshold amount mentioned in Section 3.1, with some exceptions.
It is important to note that a Swiss company and its foreign permanent establishment (or a foreign company and its Swiss permanent establishment) are treated as separate legal entities and are subject to independent registration requirements.
Taxable Persons
According to Article 10 of the Swiss VAT Law, a taxable person is defined as an individual or entity, regardless of their legal structure, engaged in a business activity with the intention of generating sustainable income from the provision of goods or services, and who is not exempt from VAT liability.
Voluntary Registration
For voluntary VAT registration, the registration must be maintained for the duration of a calendar year. The application procedure remains the same as for mandatory registration.
Individuals or businesses may choose to voluntarily register for Swiss VAT, even if they are not obligated to do so, in order to have the opportunity to reclaim input VAT. Swiss companies that do not surpass the mandatory registration threshold have the right to register voluntarily if they engage in business activities in Switzerland, regardless of whether or not they generate turnover within Switzerland. This means that start-up companies are eligible to register for VAT before they achieve any kind of turnover.
Exemptions from Registration
According to Articles 10 and 66 of the Swiss VAT Law, a business is exempt from VAT liability and therefore not required to register for Swiss VAT if it meets any of the following conditions:
- Its turnover in a year is below the specified registration threshold, regardless of whether it is a business or a nonprofit organization.
- It exclusively provides supplies with a place of supply outside Switzerland.
Download the Swiss VAT Guide
Group and Divisional Registration
Under the Swiss VAT Law, it is permissible for eligible entities to form a VAT group, where they are considered as a single taxable person for VAT-related matters.
The option to register divisions of a single entity is exclusively available to municipalities, subject to specific requirements.
VAT Representatives
When a business located outside Switzerland registers for VAT in the country, whether it is mandatory or voluntary, it is required to appoint a fiscal representative established within Switzerland. The fiscal representative serves as the designated correspondence address and contact point for the Swiss Federal Tax Administration (FTA) and assists the foreign business in meeting its VAT registration obligations.
It is important to note that while the fiscal representative assists with VAT compliance, they are not jointly liable for any VAT payments. The ultimate responsibility for VAT compliance and payment rests with the taxpayer. Therefore, to ensure the fulfillment of anticipated VAT obligations, the FTA requires registrants established outside Switzerland to provide collateral in the form of a cash or securities deposit.
The collateral serves as a guarantee for the payment of VAT liabilities and helps secure the taxpayer’s obligations.
Distance Sales
Switzerland is neither a member of the European Union nor part of any other international group that has established a special VAT regime concerning place of supply rules.
Last Updated: 09/08/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
