VAT in Switzerland
In 1995, Switzerland implemented its present value Added Tax (VAT) system. Federal Tax Administration (FTA) is now in charge of overseeing Swiss VAT returns, compliance, and registration for non-resident traders. A non-resident trader registration is required for EU companies doing business in Switzerland, whether buying, selling, or importing products. All sales, including those of raw materials, are subject to VAT.
What is the Swiss VAT?
If you’re planning to establish a Swiss business, you need to keep in mind that you’ll also need to register for VAT after the company registration process.
Since 2011, Switzerland has had the lowest VAT rate in Europe, at 8 percent. Companies that sell food, medicine, newspapers, and books will also be eligible for lower VAT rates of 2.5 percent. There is a 3.8 percent VAT on accommodations, but there is no tax on public health, education, or social or financial services of any kind. A UID number, which local customs agencies already use for Swiss enterprises exporting products, will be required by the VAT Office for local businesses. Importers from outside Switzerland must utilize their EORI number to do business here.
Unlike other EU member states, Switzerland is free to determine its VAT rates and isn’t bound by EU regulations (a standard rate of 15 percent or above). A VAT filing is required for all service providers to collect the right VAT rate and the tax and pay it to Swiss tax authorities.
Switzerland’s current VAT rates are as follows:
-standard rates have been reduced from 8.7% to 7.77%;
– some tourist activities, such as hotel stays, are subject to a reduced tax rate of 3.7%;
– an additional reduced rate of 2.5% applies to a broad range of items sold in Switzerland such as food and beverages (except those sold in hotels); agricultural supplies; water; printed materials; medicines; cultural and sporting events.
– Exports of products and services for aviation operations are tax-free.
Businesses from other countries operating in Switzerland must adhere to local VAT regulations:
• They must utilize foreign currency rates that the relevant authorities have authorized.
• Make any required changes.
• Ensure that clients are invoiced by Swiss VAT legislation.
• The receiver’s signature, legitimacy, and consent must be included in the electronic invoices.
• A minimum of 10 years is required for keeping records.
In Switzerland, who must register for VAT?
According to Swiss law, both individuals and businesses are obliged to register for VAT if they sell or supply products or services subject to VAT.
When a firm first begins operating, registering for VAT is entirely optional. However, the national law stipulates that it might become necessary after generating a certain amount of revenue.
When establishing a business in Switzerland, foreign companies are also needed to register for VAT. A business in Switzerland may benefit from the country’s low VAT rate, which is one of Europe’s lowest standard VAT rates.
Swiss VAT registration in 2022
As a result of Switzerland’s adoption of the EU’s reverse charge laws in 2010, the number of businesses registering for VAT has decreased significantly.
Companies that are required to register for VAT are those that do the following:
• import items to Switzerland.
• Buying and selling items inside the nation.
• Create an online shopping experience for Swiss customers.
• Warehouse storage of items till resale
• Organize performances and live events that sell tickets.
• In Switzerland, services are delivered on the reverse charge rule (even if they are non-VAT traders)
Before applying for VAT in 2022, a firm must be registered with the Commercial Registry. It may then submit an application in person or online at a Local Federal Tax Administration office. The authorities issued a tax identification number (UID), and the process is complete (Unternehmens-Identifikationsnummer).
Switzerland’s voluntary VAT registration
While VAT registration is not required to start a company in Switzerland, getting a tax identification number is necessary.
However, a Swiss VAT number should be obtained as soon as possible, as it will save time later when the firm must wait for the number to be given, saving money. Businesses might seek voluntary registration when they expect their operations to bring in enough revenue to justify required registration.
Registration is required in Switzerland.
As soon as a company’s annual revenue surpasses 100,000 CHF, it becomes exempt from paying corporate taxes in Switzerland. If this is the case, you have 30 days from the day you meet the need to finalize your VAT registration.
Switzerland’s VAT compliance
In Switzerland, all individuals and businesses, foreign or domestic, must comply with the country’s VAT laws. Among the many:
– they must produce invoices that include the VAT amount and the rate at which it was imposed;
– the need to keep VAT records and accounting (which must be kept at the company’s headquarters for a minimum of 10 years);
– if necessary, they must also produce credit notes.
Taxpayers may send electronic invoices that need a signature and other verification components. As for overseas VAT payers, they must follow Swiss invoicing rules. Invoices may be issued using a variety of allowed currency rates.
The following requirements must be followed when it comes to reporting and paying VAT:
– Reporting may be done on a monthly or quarterly basis;
– After reporting, the VAT payment must be made within 30 days.
In certain circumstances, VAT exemptions apply. There are a few exceptions: healthcare, education, and culture. VAT exemptions also apply to the sale or leasing of real estate.
VAT refund in Switzerland
All earnings produced in Switzerland are subject to Swiss VAT. The Swiss government offers tax refunds to companies that pay VAT in Switzerland. Certain foreign corporations are eligible for VAT refunds just once a year; however, this does not apply to all of them. Application signed by the business owner must be submitted to the Federal Tax Administration of Switzerland by June 30 of that year to be eligible for a refund. In 2022, he must provide genuine invoices and confirmation of Swiss VAT registration. If the proof is approved, the company owner will get the return within six to nine months.
Deportation-related purchases are eligible for VAT refunds. A Switzerland VAT Refund Station must be visited to get the VAT refund, which requires receipts for the products bought and, if possible, evidence of departure. Airports, tourism offices, and international travel hubs are popular targets.
Intra-community VAT will be in place in Switzerland in 2022.
A common set of tax rules governs Switzerland’s trade dealings with the EU since the country is a member of the Economic Free Trade Association. Any business that sells products or services, regardless of whether it is based in the EU or Switzerland, must charge VAT to the customer’s nation. Electronics, telecommunications, television, catering, education, and culture are exceptions.
VAT registration in Switzerland in 2022 is simple.
Switzerland’s accounting services
Switzerland has a three-tiered corporation taxation structure that might be challenging for international investors to understand. Although Switzerland is not a member of the European Union (EU) and does not have to apply the normal VAT rate at a minimum of 15%, some elements must be addressed when dealing inside the European Union (EU).