Swiss VAT Update 2019: will my business be affected?

New Swiss VAT rules have potentially serious consequences for vendors exporting small consignments to Switzerland or persons and/or businesses with turnover in Switzerland. Here is a brief rundown of the changes to help prevent you or your customers from getting into trouble.

What has changed?

From 1 January 2018 onwards, any person or business with global turnover of CHF 100’000 or more may be liable to VAT starting from the first franc of turnover in Switzerland. This means that if you want to continue doing business in Switzerland, you need to register with the Tax Authority.
Starting the first day of 2019, small consignments sent to Switzerland from abroad may also have VAT consequences. Any seller that sends low-value goods (value less than CHF 65) with a total value of more than CHF 100,000 a year to Switzerland has to register for VAT in Switzerland and charge Swiss VAT to customers receiving such consignments.
The previous arrangement was that no import VAT had to be paid when a consignment entered Switzerland if the value of the goods didn’t exceed CHF 65 (or CHF 200 for goods such as books that are subject to a reduced rate of VAT) and there were never any VAT consequences for the seller. While still no import VAT is levied on small consignments, the seller may now need to register and charge VAT to its Swiss customers.

Am I affected?

To find out whether you are affected by the new rules, you should:

• Check whether your turnover from low-value consignments sent to Switzerland will be/is more than CHF 100,000 in 2019. That’s equivalent to around USD 100,000, EUR 89,000 or GBP 80,000 and/or,
• Check if your global turnover is more than CHF 100,000 and have a taxable turnover in Switzerland.

What do I have to do next?

If you exceed the CHF 100K threshold for low-value supplies, you have to register with the Swiss VAT authorities with effect from 1 January 2019.
If you have a global turnover of CHF 100,000 you have to register for Swiss VAT from the first franc taxable turnover in Switzerland.
Remember that it is up to you to assess your Swiss VAT situation yourself and register if you meet the requirements. You will then need to appoint a fiscal representative in Switzerland and provide security for VAT liabilities in the form of cash or a bank guarantee.

What else do I need to know?

Once you have registered for Swiss VAT you have to charge VAT to your Swiss customers. The current rates are 7.7% for standard-rated goods and services and 2.5% for reduced-rated goods (such as e.g. books). You need to indicate this VAT on the invoice, collect it from the customer, declare it in a Swiss VAT return, and pay it to the Swiss Tax Authorities.

What if not all of my goods are low-value goods?

If you sell low value-goods and also goods which exceed the CHF 65 (standard) or CHF 200 (reduced-rate) threshold, the following happens to the goods above the threshold:

• If you don’t need to VAT register because of the low-value consignments, you’re fine. Import VAT needs to be paid by your Swiss customers and there is no obligation for you.
• If you are VAT registered because of the low-value consignments, the following applies: When the goods enter Switzerland, the Swiss Federal Customs Authorities assesses import VAT and charges it to you. You pay this import VAT and reclaim it as input VAT via your VAT return. This means that while the import VAT is not a final cost to your business, you do need to finance it.
• Secondly, you charge Swiss VAT to your customer. In other words, you indicate it on the invoice, collect it, report it on your VAT return, and pay it to the Swiss Federal Tax Authorities.