The Swiss Federal Tax Authority (FTA) has recently published guidance relating to its amended position for certain supplies of goods with installation services.
Since 2018, if a foreign company delivers goods (e.g, a machine) from abroad and installs it in Switzerland, the place of supply is Switzerland and the transaction is liable for Swiss VAT. Unlike the EU, there is no reverse charge simplification for such transactions. This means the company will have to register for Swiss VAT and charge Swiss VAT once its global turnover exceeds CHF 100,000.
By contrast, the place of supply for the delivery of an imported good into Switzerland, is where the transport of the good starts, so the transaction falls outside the scope of Swiss VAT. The FTA has decided that this rule also applies to certain bundled supplies (known as composite supplies within the EU) with assembly or installation services on the proviso that these services qualify as ancillary services to the delivery under certain specified conditions. In such cases, the Swiss VAT registration requirement remains untriggered despite the fact that the assembly or installation takes place in Switzerland.
However, if the assembly or installation does not qualify as ancillary to the main service then the entire supply is treated as a work contract for delivery. The place of supply is Switzerland. The related turnover therefore, counts towards a company’s potential VAT liability.
Companies delivering goods into Switzerland that are unsure as to whether their anticipated assembly or installation work will fall under the ancillary services classification, are advised to seek legal clarity by applying to the FTA for a binding ruling before they carry out the supply.
Contact our VAT experts now and find out how this change could affect your business.