Who has to pay Swiss VAT?
In Switzerland, the value-added tax (VAT) is a consumption tax that is charged on most goods and services. VAT is paid by the end consumer, which means that businesses and individuals who buy goods and services are the ones who pay VAT.
However, businesses that provide taxable goods or services in Switzerland are required to register for VAT and charge VAT on the value of the goods or services they provide. These businesses must collect the VAT from their customers and then remit it to the Swiss Federal Tax Administration (FTA) on a regular basis.
In general, businesses with an annual turnover of CHF 100,000 or more are required to register for VAT, but there are some exceptions and special rules for certain types of businesses.
How do I register for Swiss VAT as a business?
You will need to obtain a VAT identification number from the Swiss Federal Tax Administration (FTA). You can apply for the VAT identification number online or by mail. Submit the form to the FTA: Once you have completed the form, you can submit it to the FTA by mail or electronically. If you submit the form electronically, you will need to use the FTA's e-dec web portal.
After the FTA receives your VAT registration form, they will process it and assign a VAT identification number to your business. The VAT identification number will be sent to you by mail or electronically.
How much is Swiss VAT in Switzerland?
The current standard rate of VAT in Switzerland is 7.7%. This rate applies to most goods and services, including imports. However, there are reduced rates of 2.5% and 3.7% that apply to certain goods and services such as food, books, pharmaceutical products, newspapers, and public transportation.
VAT is payable by businesses registered for VAT in Switzerland. Businesses that have an annual turnover of more than CHF 100,000 (approximately $110,000) are required to register for VAT. Once registered, businesses are required to charge VAT on their sales and can claim back VAT paid on their purchases. However, businesses with an annual turnover of less than CHF 100,000 can voluntarily register for VAT.
It's worth noting that Switzerland is not a member of the European Union (EU), but it has a similar VAT system. Therefore, businesses that trade with the EU may need to comply with both Swiss and EU VAT regulations.
When is Swiss VAT not applied?
There are some cases where Swiss VAT may not be applied, such as:
- Exports: If goods or services are exported outside Switzerland, VAT is not applicable.
- Imports: If goods or services are imported into Switzerland, VAT is generally payable at the border, but there are some exceptions for certain types of goods and services.
- Small businesses: Businesses with an annual turnover of less than CHF 100,000 are not required to register for VAT, and therefore do not charge VAT on their sales.
- Certain goods and services: Certain goods and services are subject to reduced VAT rates or exemptions, such as food, books, newspapers, and public transportation.
- International organizations: International organizations such as the United Nations and its specialized agencies, as well as their staff, are generally exempt from VAT.
Which goods and services don’t require vat?
In Switzerland, some goods and services are either exempt from VAT or subject to a reduced VAT rate. Here are some examples:
- Basic foodstuffs, including meat, vegetables, fruits, dairy products, bread, and cereals are subject to a reduced VAT rate of 2.5%.
- Pharmaceuticals and medical products, including medicines, prostheses, and medical equipment, are subject to a reduced VAT rate of 2.5%.
- Printed books, newspapers, magazines, and e-books are subject to a reduced VAT rate of 2.5%.
- Public transportation services, including bus, tram, and train services, are subject to a reduced VAT rate of 3.7%.
- Education and training services, such as tuition fees for schools, universities, and vocational training institutions, are generally exempt from VAT.
- Healthcare services provided by doctors, hospitals, and other medical professionals are generally exempt from VAT.
- Financial services, such as banking, insurance, and investment management, are generally exempt from VAT.
How do Swiss businesses charge for Swiss VAT?
When a business charges VAT, they typically include the VAT amount on their invoice or receipt as a separate line item. The invoice should also include the business's VAT identification number, the amount of VAT being charged, and the total amount due.
For example, if a business sells a product for 100 Swiss Francs and the applicable VAT rate is 7.7%, they would charge the customer 107.70 Swiss Francs (100 + 7.70).
Do businesses only charge Swiss VAT on services and products they sell to only Swiss customers?
No, businesses that are registered for Swiss VAT must generally charge VAT on all taxable supplies of goods and services, regardless of whether the customer is located in Switzerland or abroad. However, the specific rules and requirements can vary depending on the nature of the supply and the location of the customer.
In general, if a business supplies goods or services to a customer who is located outside of Switzerland but within the European Union (EU), the transaction may be subject to a different type of VAT known as "reverse charge." This means that the customer is responsible for accounting for the VAT on the transaction, rather than the supplier.
If a business supplies goods or services to a customer who is located outside of Switzerland and outside of the EU, the transaction may be exempt from VAT if certain conditions are met.
If my customer is in the EU, do I apply Swiss VAT on my invoice?
No, if your customer is in the EU, you should not apply Swiss VAT on your invoice. Switzerland is not a member of the European Union (EU) and therefore, Swiss VAT rules do not apply to EU customers. Instead, you would need to apply the VAT rules of the EU country where your customer is located. This means that you may need to register for VAT in that country and charge the appropriate rate of VAT on your invoice.
What are the conditions where Swiss VAT is exempt?
If a business supplies goods or services to a customer who is located outside of Switzerland and outside of the EU, the transaction may be exempt from Swiss VAT if both of the following conditions are met:
- The supply is made to a customer who is established or domiciled outside of Switzerland, and who does not have a permanent establishment or fixed establishment in Switzerland; and
- The goods or services are used or consumed outside of Switzerland.
If these conditions are met, the supply is considered to be an "export" and is generally exempt from Swiss VAT.
How do you apply a Swiss reverse charge vat?
Reverse charge VAT is a mechanism where the responsibility for accounting and paying VAT is shifted from the supplier of the goods or services to the customer or recipient of those goods or services. In Switzerland, reverse charge VAT is applicable in specific circumstances, such as when goods or services are supplied by a foreign company without a Swiss VAT registration to a Swiss company, or in the case of certain cross-border transactions.
To apply reverse charge VAT in Switzerland, the following steps should generally be taken:
- The supplier must indicate on their invoice that the reverse charge mechanism is applicable, and include the VAT identification number (VATIN) of the customer.
- The customer must account for the VAT in their own VAT return, and also include the VAT amount on their own invoice to their own customer, if applicable.
- The customer must ensure that they have a valid VAT registration and that the goods or services are used for taxable activities.
- The customer must also ensure that they have the necessary documentation to support the VAT deduction, such as the supplier's invoice, proof of payment, and any other relevant documentation.
What if the EU supplier didn’t apply VAT in invoice?
If a supplier did not apply VAT to an invoice where VAT should have been charged, the customer or recipient of the goods or services may still be liable for the VAT owed to the tax authorities. In Switzerland, the recipient of the goods or services is responsible for paying the VAT if the supplier did not charge it.
In this situation, the customer should contact the supplier to request an amended invoice with the correct VAT amount. If the supplier is unwilling or unable to issue an amended invoice, the customer may need to calculate and pay the VAT to the tax authorities themselves. The customer can then claim the VAT back as input tax in their VAT return, provided they have the necessary documentation to support the claim.
What is input tax?
Input tax is the VAT (Value Added Tax) that a business pays on its purchases of goods and services for its business activities. It is called input tax because it is a tax that a business pays as a cost of inputs or expenses to its operations.
For example, if a business buys materials for manufacturing a product or purchases services such as accounting or legal services, the VAT paid on those purchases is considered input tax. This input tax can be recovered by the business if they are registered for VAT and the goods or services are used for taxable activities.
Input tax is important because it can be offset against output tax, which is the VAT charged on sales of goods or services made by the business. If the input tax exceeds the output tax, the business may be entitled to a refund from the tax authorities.
In Switzerland, businesses that are registered for VAT can claim back the VAT they have paid on their purchases as input tax. It's important to keep accurate records of all purchases and the VAT paid on them, as well as to ensure that the purchases are eligible for VAT recovery under Swiss tax law.
Who do you pay the input tax to?
In Switzerland, businesses that are registered for VAT pay input tax to the tax authorities. The VAT paid on purchases is offset against the VAT charged on sales, and the net amount is either paid to or refunded by the tax authorities.
The Swiss VAT system operates on a self-assessment basis, meaning that businesses are responsible for assessing and reporting their own VAT liability. Businesses that are registered for VAT must submit VAT returns to the Swiss Federal Tax Administration (FTA) on a regular basis, typically quarterly or monthly. In the VAT return, the business must report the VAT charged on their sales (output tax) and the VAT paid on their purchases (input tax).
If the output tax exceeds the input tax, the business must pay the difference to the FTA. If the input tax exceeds the output tax, the business is entitled to a refund of the excess VAT from the FTA.
How can you claim vat back as input tax?
In Switzerland, businesses that are registered for VAT can claim back the VAT they have paid on their purchases as input tax. Here are the general steps to claim back VAT as input tax:
- Keep all relevant documentation: The business must keep all the invoices and receipts for purchases they make that include VAT, as well as any other relevant documentation such as customs documents, import/export declarations, or proof of payment.
- Check the eligibility: The business must ensure that the purchases they made are eligible for VAT recovery under Swiss tax law.
- Include the input tax in VAT return: The business must include the input tax they wish to claim back in their VAT return for the period in which the purchase was made.
- Submit the VAT return: The business must submit the VAT return to the Swiss Federal Tax Administration along with the required payment of any VAT due or request for a refund if the input tax exceeds the output tax.
- Respond to queries: The tax authorities may request further information or documentation to support the VAT claim. It's important to respond to any queries in a timely and accurate manner.
Can you take advantage of VAT reverse charge if you are not charging VAT?
No, if you are not charging VAT on your sales, you cannot take advantage of the reverse charge mechanism. The reverse charge mechanism applies when the customer is responsible for accounting for the VAT instead of the supplier, but this is only applicable if the supplier is already registered for VAT and charging VAT on their sales.
In Switzerland, the reverse charge mechanism is generally used for certain types of cross-border transactions, where the supplier is located outside of Switzerland and the customer is located in Switzerland. The customer is then responsible for accounting for the VAT on the transaction, instead of the foreign supplier.
If you are not registered for VAT and not charging VAT on your sales, you cannot apply the reverse charge mechanism, and your customers are not responsible for accounting for any VAT on the transactions.
Do you pay VAT on crypto transactions?
In general, if the crypto transaction involves the supply of goods or services that are subject to Swiss VAT, then VAT may apply.
For example, if you are a Swiss business that accepts payment in crypto for the sale of goods or services, you may need to charge VAT on the value of the transaction at the applicable VAT rate. On the other hand, if you are a Swiss individual who buys crypto for personal use, you typically do not need to pay VAT on the purchase.
If you are working as a financial services company dealing with cryptocurrency, the VAT treatment of your transactions would depend on the nature of your services and the specific circumstances of each transaction.
Generally, if you are providing services related to cryptocurrency, such as trading or brokerage services, these services would typically be subject to Swiss VAT. This means that you may need to charge VAT on the value of your services at the applicable VAT rate.
However, there are certain financial services related to cryptocurrencies that may be exempt from VAT under Swiss law, such as the management of collective investment schemes. The specific conditions for these exemptions can be complex and may require a detailed analysis of the nature of the services provided and the relevant regulations.
Is there a special rate for crypto on VAT?
In Switzerland, there is no special VAT rate for cryptocurrencies. The standard VAT rate of 7.7% applies to most goods and services, including those that are purchased using cryptocurrencies.
Can you apply reverse charge VAT on crypto?
In Switzerland, the reverse charge mechanism can be applied to certain transactions involving cryptocurrencies, such as when a business purchases cryptocurrencies from another business. This means that the purchaser is responsible for accounting for the VAT on the transaction rather than the supplier.
The reverse charge mechanism is typically used in cases where the supplier is located outside of Switzerland and is not registered for Swiss VAT, or if the supplier is a small business that is not required to register for VAT.
What are the Swiss VAT filing deadlines?
The Swiss VAT filing deadlines can vary depending on the individual circumstances of the taxpayer and the canton in which they are registered. However, in general, the following deadlines apply:
- Quarterly VAT filers: The VAT return must be submitted and the VAT payable must be paid by the end of the month following the end of the quarter.
- Monthly VAT filers: The VAT return must be submitted and the VAT payable must be paid by the end of the month following the month in which the taxable supply was made.
Where can I submit my Swiss VAT?
Swiss VAT returns can be submitted electronically through the Swiss Federal Tax Administration's (FTA) online portal called "ESTV-Connect". To use the ESTV-Connect portal, you must first register for an account with the FTA and obtain a digital signature.
You can find more information on how to register and obtain a digital signature on the FTA's website. Alternatively, you can also submit your VAT returns by mail or in person to the tax authority of the canton in which you are registered for VAT.
Can I see an example of a Swiss VAT invoice?
In this example, the invoice includes the following information:
- Your company name, address, and country
- Invoice number and date
- Customer name, address, and country
- Description of the products or services provided, including quantity, unit price, and total price
- Subtotal, VAT amount, and total amount due
- Payment terms and due date
- Your company's VAT identification number (VAT No.)