On the 29 September 2016, the two chambers of the Swiss Parliament approved a revision of the Swiss VAT legislation.

It will be effective from the 1st January 2018.  The legislation contains various changes, the majority of which are expected to impact non-Swiss businesses and lead to nearly 30,000 non-established businesses  having to register for Swiss VAT.

Some key changes coming into effect will be:

  • All foreign multinational companies operating in Switzerland whose worldwide annual turnover is above CHF 100,000 will have to register for Swiss VAT when making supplies subject to Swiss VAT;
  • Once registered for VAT, supplies previously subject to the reverse charge will become subject to Swiss VAT chargeable by the supplier;
  • VAT will apply to e-books and online media at the reduced rate of 2.5%.
  • The place of supply for goods currently subject to the low value exemption of CHF 5 will become Switzerland and once the value of supplies exceeds CHF 100,000 the supplier will need to register and start accounting for Swiss VAT on the income; and
  • The place of supply for gas, electricity and long-distance heating made on a B2C basis will be where the energy is used.

What is the business impact of these changes?

This revision of the Swiss VAT law will undeniably increase the number of registrations primarily from foreign non-established companies and also some established entities.

If a business is operating in Switzerland, it is important that it gains a comprehensive understanding of its compliance obligations under the new Swiss VAT requirements. Doing so sooner, rather than later, will ensure a sound management of potential risks and a prevention from unwelcomed surprises.