VAT Registration Switzerland - 2021 Procedure
VAT Registration in SwitzerlandUpdated on Wednesday 10th March 2021
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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 acquisition of supplies from enterprises with their place of business abroad by recipients in Switzerland (acquisition tax) and the tax on the import of 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, or companies 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 dealing with the import of goods and products into Switzerland;
- 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 2021
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 Switzerland that 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 2021, 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, and our 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 by our Swiss law firm.
For guidance on the 2021 VAT registration process, you can rely on the services of our Swiss lawyers.
What are the basic taxes in Switzerland?
Switzerland is a country that charges its taxes on a three-tier based system. When starting 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 cantons will 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 2021, our lawyers are at your service.
What are the regulations for online retailers in Switzerland in 2021?
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 2021.
Foreign companies selling good online in Switzerland in 2021 must also obtain VAT numbers.
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.