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VAT in Switzerland

Updated on Thursday 24th June 2021

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The current VAT system was introduced in Switzerland in 1995.  At the moment it is placed under the guidance of the Federal Tax Administration, that established the rules related to the returns, compliance and registration of Swiss VAT for non-resident traders. Foreign companies from EU member countries that wish to buy, sell and import goods in and from Switzerland will have to register for VAT as a non-resident trader. The VAT is collected on all sales - even for raw materials. 
 
Below, our company formation agents in Switzerland explain how the value added tax is levied in this country. You can also rely on us for various accounting services.
 

What is the VAT in Switzerland?

 
When opening a Swiss company, entrepreneurs must take into consideration that following the company registration procedure, the respective firm must also be VAT registered.
 
Switzerland is renowned for having the lowest VAT in Europe, rating 8% since 2011. Also, if trading certain supplies and services such as food, medicine, newspapers and books companies will benefit from VAT reduced rates of 2.5%. VAT for accommodation is 3.8%, while public health, education and social and financial services are exempt from VAT. The VAT Office will require local businesses to have an UID number, which is also used by the local customs authorities for Swiss businesses exporting goods. Foriegn businesses importing goods here will have to use their EORI number in Switzerland.  
 
Since it is not a part of the European Union, Switzerland is able to set its own VAT rates without being compelled to follow the guidance on rates (a standard rate of 15% or above).  All providers must charge the appropriate VAT rate, collect it and the tax for onward payment to the Swiss tax authorities through a VAT filling.
 
The current rates of the VAT in Switzerland are:
 
  • - the standard rate has been lowered from 8% to 7.7%;
  • - a special rate of 3.7% applies to certain tourism activities, among which overnight stays in hotels;
  • - another reduces rate of 2.5% applies to a wide variety of goods sold in Switzerland;
  • - a 0% rate applies to exports of goods and services provided to air operations.
 
Our specialists in company formation in Switzerland can offer more information on the changes in the VAT legislation.
 
Foreign companies operating in Switzerland must follow the local rules on VAT:
 
  • ·  They must use of approved foreign currency rates.
  • ·  Process the necessary corrections
  • ·  Send the correct and detailed invoices to customers according to Swiss VAT laws
  • ·  The electronic invoices must contain  signature, authenticity and recipient’s agreement
  • ·  Maintain records for at least 10 years
 
If you have a foreign company and want to register it for VAT in Switzerland, you can rely on our company registration advisors.
 

Who is required to register for VAT in Switzerland?

 
According to the Swiss legislation, both natural person and companies are required to register for the value added tax if they sell or supply VAT-payable goods, respectively services.
 
VAT registration in Switzerland is voluntary at the beginning of operations of businesses, however, it can also become mandatory once a certain turnover is reached, according to the national legislation.
 
In the case of foreign entities, these too are required to register for VAT when setting up operations in Switzerland.
 
Switzerland has one of the lowest standard VAT rates in Europe, which is why setting up a business here can come with various tax advantages.
 

VAT registration in Switzerland in 2021

 
In 2010 Switzerland has adopted the EU rules regarding the use of the reverse charge and since then the list of companies offering services that require VAT registration is much shorter.
 
Companies that must register for VAT are those that:
 
  • ·   Import goods in Switzerland.
  • ·   Buy and sell goods within the country.
  • ·   Make online commerce for Switzerland consumers. Contact our company formation specialists in Switzerland for more details on this topic.
  • ·   Storage goods in a warehouse until resale
  • ·   Organize shows and live events with an entrance fee
  • ·   Are provided with services in Switzerland under the reverse charge rule (even if they are non-VAT traders)
At the level of 2021, Before registering for VAT, the company itself must be registered at the Commercial Registry. After that, it can fill in an application at the Local Federal Tax Administration office or send it online. The procedure is completed after the authorities assign the company a tax number called UID (Unternehmens-Identifikationsnummer).
 

Voluntary VAT registration in Switzerland

 
Starting a business in Switzerland implies completing various steps, among which VAT registration is not mandatory, however, obtaining a tax identification number is.
 
Obtaining a Swiss VAT number is recommended, however, from the beginning of operations as it will save time later when the business will need to wait for the number to be issued. Voluntary registration is also recommended when a business owner considers the activities conducted will generate the income that leads to mandatory registration.
 
If you need more information on why you should register for VAT in Switzerland upon company incorporation, our advisors are at your disposal. Moreover, we can handle the entire procedure alongside the creation of your company.
 

Mandatory registration in Switzerland

 
According to the Swiss tax laws, once a company reaches 100,000 CHF in turnover. In this case, VAT registration must be completed within 30 days since this requirement has been met.
 
VAT registration is quite simple and requires filing a few documents with the Swiss tax authorities and you can rely on our accountants if you need assistance.
 

VAT compliance in Switzerland

 
Natural persons and companies, no matter if they are foreign or locals must meet certain VAT compliance requirements in Switzerland. Among these:
 
  • - they need to issue invoices that need to contain the VAT amount and the rate it was applied at;
  • - the need to maintain VAT accounts and records (these must be held at the company’s head office for a minimum of 10 years);
  • - they must also prepare credit notes, if required.
 
It is possible for taxpayers to issue electronic invoices that must contain a signature and various authentication elements. In the case of foreign VAT payers, these must comply with the Swiss invoicing legislation. They can use various approved currency rates when issuing such invoices.
 
In terms of reporting and paying the collected VAT amounts, the following rules must be respected:
 
  • - reporting can be completed on a monthly or quarterly basis;
  • - after reporting, the payment of the VAT must be done within maximum 30 days.
 
In certain cases, VAT exemptions apply. Among these, healthcare, education, and culture related services are exempt from this tax. Also, real estate sale or lease benefit from VAT exemptions.
 
We can provide you with tailored accounting services in Switzerland, including VAT report preparation and filing.
 

VAT refund in Switzerland

 
All profits made in Switzerland are VAT taxable. Companies that pay VAT in Switzerland are offered the possibility to obtain refunds by the Swiss Government. VAT refunds are obtained only once a year by certain foreign companies – not all are entitled to it. The amount can be recovered by submitting an application signed by the business owner to the Federal Tax Administration of Switzerland before the 30th June of the following year. He must provide original invoices and proof of VAT registration in Switzerland in 2021. If evidence is accepted, the business owner will receive the refund within 6 to 9 months.
 
VAT refunds are also possible for persons that buy goods for deportation. In order to receive the VAT refund, they must present receipts for the purchased goods and preferably proof of deportation, to a Switzerland VAT Refund Station. These are often found in airports, tourist offices, or international travel hubs.
 

Intra-community VAT in Switzerland in 2021

 
Switzerland is a member of the Economic Free Trade Association (EFTA) and therefore, the economic relations between Switzerland and EU countries are stipulated under similar tax laws. Whether the provider of goods and services is a member of the EU or Switzerland, he will pay the VAT in the country in which the consumer is located. There are some exceptions that apply to electronic, telecommunications, broadcasting, catering, education or culture areas.
 
VAT registration in Switzerland in 2021 is not complicated. Those who need assistance can rely on our specialists.
 
If you have any questions on VAT registration for a Swiss company at the level of 2021, you can rely on our company formation agents.
 

Accounting services in Switzerland

 
Switzerland has a different taxation system when it comes to companies, as the corporate tax applies at 3 levels which can create difficulties to foreign investors. Even when it comes to the value added tax, the fact that Switzerland is not an EU member state and does not need to apply the standard VAT rate at a minimum of 15%, certain aspects need to be considered when trading within the EU.
 
For understanding how taxation works and for preparing the financial documents in order to comply with the local rules, you can rely on our Swiss accountants who are at your service no matter if you run a small or large company, or even a microenterprise that is subject to special tax regulations.
 
For more information regarding the VAT tax or other special taxes in Swiss cantons please contact our accountant in Switzerland.

 

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Paul Gheorghiu is one of our experienced company formation agents. He will help you register your company in Switzerland as fast as possible.
   
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