The Swiss taxation system is made of direct and indirect levies, even if it applies on a three-tier level, namely at a federal, cantonal, and municipal one.
While the most important direct tax is the income levy, the value added tax (VAT) is the most important indirect one, as it contributes decisively to the Swiss economy.
In order to pay the value added tax, Swiss companies and natural persons, in some cases, need to register with the local tax authorities.
Below, our lawyers in Switzerland present the main regulations on VAT registration and the procedures you need to go through to obtain a VAT number.
We offer VAT registration services
YES, we can help with VAT registration in Switzerland
3.7% for tourism and hotel accommodation, 2.5% for medicines, books, newspapers
Who needs VAT registration in Switzerland
Local and foreign companies with a turnover of CHF 100,000, however, voluntary VAT registration is also possible in Switzerland
Time frame for registration
Approx. 4 weeks
VAT for real estate transactions
Standard rate applies
YES, property rental, healthcare, education, cultural activities
Period for filing
Monthly or quarterly reporting is possible
VAT returns support
YES, we can help you file VAT returns in Switzerland
Refunds are available for purchases of minimum CHF 300 with rates between 3.8% to 6%
Local tax agent required
NO, however, one can be appointed
Who collects the VAT
Federal Tax Administration in Switzerland
Documents for VAT registration
Application form, company details (name, legal address), proof of meeting the VAT registration threshold (if applicable)
VAT number format
Country code CHE followed by a 9-digit code and letters MWST
VAT de-registration situations
Company ceases its activities, goes bankrupt, no longer meets the registration threshold
The value added tax in Switzerland
The value added tax(VAT) represents a consumption tax that is applicable to domestic goods or services and which falls under the supervision of the Swiss Federal Tax Administration. VAT is imposed to producers, manufacturers, tradesmen, retailers and service providers. Once a company is registered with the Commercial Registry, it will also have to be VAT registered. Foreign companies also have to abide by VAT laws on the Swiss territory.
The Swiss Confederation levies the VAT as it follows: the tax on supplies (supplies of goods and of services) rendered by taxable persons in Switzerland (domestic tax), the tax on the acquisitionof supplies from enterprises with their place of business abroad by recipients in Switzerland (acquisition tax) and the tax on the importof goods (import tax).
The entities that have to pay VAT in Switzerland are the following: sole proprietorships, simple partnerships, general and limited partnerships, legal persons, administrative offices and agencies of the public sector, associations, clubs, non-profit institutions and foreign companies if they have taxable incomes on Swiss territory.Our team of Swiss lawyers can provide in-depth information on the manner in which these types of entities have to register for VAT in this country.
The new VAT law enforced in 2010 has set the new threshold for tax liability at CHF 100,000. There are also companies that are exempt from paying VAT. These are companies with less than CHF 100,000 turnover, non-profit, voluntary managed organizations with less than CHF 150,000 turnover, orcompanies based outside Switzerland that provide services and are only subject to the acquisition tax.
Tax rates in Switzerland
The standard tax rate is 7,7%, the lowest in Europe, and it is applied to most goods and most of services, but there are also exceptions such as food and non-alcoholic drinks, medicines, certain newspaper, magazines and books that are taxed with 2,5% and tourism rates for hotel accommodation including breakfast subjected to 3,7% VAT.
Who must apply for a Swiss VAT number?
There are a number of entities that must apply for VAT registration in Switzerland, as stipulated by the national tax legislation. Our team of Swiss lawyers can present the steps for Swiss VAT registration and can provide legal representation to those who need tax advice and assistance. As a general rule, the following types of entities are required to register for VAT in this country:
entities buying and selling goods on the Swiss territory;
companies and other parties that sell goods to Swiss consumers on the internet;
entities storing goods and products in Swiss warehouses;
parties organizing events and shows at which the customers pay for an entry ticket.
The Swiss VAT registration process in 2022
The registration process for paying the VAT is quite simple and it only requires a few steps: completing a basic online questionnaire which will hold legal binding information, appointing a fiscal representative in Switzerland and placing a bank guarantee or deposit on behalf of the Swiss tax authorities.
Companies in Switzerlandthat meet the requirements for paying the VAT are legally required to start the Swiss VAT registration once their tax liability begins. This needs to be concluded with the Federal Tax Administration in a period of maximum 30 days since the date in which they become liable for taxation. At the level of 2022, the VAT registration in Switzerland has to be done on a voluntarily basis.
The registration can be done online and for this to happen, liable companies are required to complete a form and to provide the required information. The procedure is similar for both local and foreign companies, andour team of Swiss lawyers can provide more information with regards to the necessary steps. Some of the basic information that companies must offer refers to the following:
the name and the address of the company that is requesting to obtain a VAT number in Switzerland;
the name and the address of the Swiss fiscal representative (if the applicant company is a foreign entity);
the Swiss turnover of the foreign company which falls under the scope of the VAT registration in Switzerland;
here, the company must specify if the taxable turnover refers to the supply of goods that is charged with the VAT during their import;
the taxable turnover can also refer to the supply of goods that was not charged with the VAT when imported into Switzerland.
Once the process of VAT registration in Switzerland was completed, the local authorities will inform the Swiss representative on whether the application was successful in a period of 5-7 working days. The next step is to receive a VAT number in Switzerland; more information on the obligations that derive once the company is registered for VAT can be provided byour Swiss law firm.
For guidance on the 2022 VAT registration process, you can rely on the services of our Swiss lawyers.
Applying for a Swiss VAT number voluntarily
Setting up a business in Switzerland implies various steps, however, when it comes to taxation, only the tax identification number must be obtained during the incorporation procedure. This means that VAT registration in Switzerland can be completed voluntarily.
Even so, obtaining a Swiss VAT number is recommended during the same procedure as it will save time when the business could engage in activities that require such a number, for example trading with EU countries which require EORI registration (EORI numbers contain the VAT number of a company).
Voluntary registration is also advised when a Swiss company expects to generate income that requires. mandatory registration.
If you need guidance on voluntary VAT registration, our Swiss lawyers are at your service. However, you should know that the procedure will not hinder you in starting your business operations in the time you have planned to.
Mandatory registration for VAT in Switzerland
If you have not applied for a Swiss VAT number voluntarily, you will need to once your company has reached 100,000 CHF in turnover. In this case, you need to apply for VAT registration in no more than 30 days in order to avoid penalties.
Just like in the case of the voluntary procedure, the mandatory one is simple and requires presenting a few documents with the tax authorities. We can provide assistance in this case too.
If you want to obtain a VAT number in Switzerland for your foreign company, our lawyers can help you.
What are the basic taxes in Switzerland?
Switzerland is a country that charges its taxes on a three-tier based system. Whenstarting a business in Switzerland, investors should be aware that the taxes are charged at a federal, cantonal and municipal level. Besides the VAT registration in Switzerland, businessmen should also register for additional types of taxes in Switzerland, some of which are presented in the list below:
starting with 2020, the Swiss corporate taxes available in the Swiss cantonswill range from 12% to 14%;
the personal income tax rate is charged at 40% in Switzerland;
the value added tax is charged at a rate of 7,7%, but lower thresholds are available, as mentioned above;
the social security tax rate is charged at 12% in the Swiss cantons;
companies are also charged with the social security tax, but they have to pay a lower tax, of 6%.
If you need information on VAT registration in Switzerland in 2022, our lawyers are at your service.
What are the regulations for online retailers in Switzerland in 2022?
Considering that online retailers develop commercial activities, that are taxable following the Swiss legislation, they also need to complete the steps for VAT registration in Switzerland. Starting with 2019, online retailers have to comply with the new regulations stipulated by the VAT Act, which was revised by the Swiss Tax Authority.
With regards to the new regulations, it is worth knowing that income from small consignments will be charged with the VAT, as long as the revenue is of at least CHF 100,000. At the same time, the Swiss Federal Council introduced a new rule, which is also applicable since 2019, in relation to the VAT charge imposed to online companies.
Thus, starting with the 1st of January 2019, online purchases that were concluded with companies abroad are also charged with the Swiss VAT. Our law firm in Switzerland can provide more details on the regulations that must be followed by online businesses; our lawyers can also represent companies in the process of obtaining a Swiss VAT number in 2022.
Foreign companies selling good online in Switzerland in 2022 must also obtain VAT numbers.
VAT compliance requirements in Switzerland
Swiss and foreign private individuals and companies must comply with the VAT compliance requirements available in Switzerland. Among these:
one is required to issue invoices containing the VAT amount and its rate;
specific VAT accounts and records must be prepared and kept at the company’s head office for at least 10 years.
In Switzerland, electronic invoices are accepted, just as paper ones, however, the former must contain specific authentication elements.
Foreign taxpayers making VAT-taxable supplies of goods and services in Switzerland are required to comply with the legislation here.
VAT compliance in Switzerland also implies reporting and paying the amounts associated with this tax as follows:
reporting periods are monthly or quarterly;
payment must be followed within maximum 30 days.
The Swiss VAT regulations also provide for tax exemption on certain goods and services. Among these, education, healthcare, and culture related services benefit from such exemptions. Real estate sale or lease can also qualify for such benefits.
Refund – one of the advantages of VAT registration in Switzerland
Obtaining a VAT number in Switzerland comes with several advantages, among which the possibility of obtaining certain refunds. Considering all profits in Switzerland are liable for VAT, all companies making them are entitled to apply for refunds.
In the case of foreign companies, not all of them are eligible, however, those who have undergone VAT registration in Switzerland can obtain once a year refunds on the certain amounts reported.
The main requirement all VAT payers must comply with is to file an application with the Federal Tax Authority before the 30th of June of the following year for the current one. Refunds can be made anytime between 6 and 9 months. You can also watch our video below on VAT registration:
EORI registration in Switzerland
Many Swiss companies import and export goods from/within EU countries, however, Switzerland is not a member state of the Union. Even it has specific agreements with the EU, in terms of trading activities, Swiss companies must obtain EORI numbers.
In order to obtain an EORI number, a business must first obtain a Swiss VAT number based on which it will register with the Economic Operators Registration and Identification database, thus easing all import and export procedures. The number is issued once and is valid through all EU member states.
Our law firm in Switzerland can guide you through the process of obtaining an EORI number.
For more information about the VAT tax or other taxes in Switzerland please contact us. Our lawyers in Switzerland will be at your disposal with qualified legal advice and personalized consultancy for each business. Our team of Swiss lawyers can offer an extensive presentation on the tax system applicable at a national and cantonal level in this country.
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Paul Gheorghiu has more than twenty years of experience in business matters and he can help you open a company in Switzerland as fast a possible. Call us at +41 41 266 0070 for any legal issue you may deal with in Switzerland.