In the court decision A-2675/2016, dated October 25 2016,
the Swiss Federal Administrative Court decided in favour of the
Swiss Federal Customs Administration (SFCA) concerning an
import VAT adjustment of more than CHF 100 million ($99.2
million) and late payment interest of CHF 924,854 for imports
that occurred between 2009 and 2014. The court backed the
application of the deductive method but did not address whether
the SFCA had created a legally non-existent distinction between
a domestic and non-domestic importer.
Company A is the non-Swiss established purchasing company of
the international C group. Company A is Swiss VAT registered.
Company C is the local Swiss sales company of the C group.
The criminal investigation team of the SFCA discovered that
the VAT value for imports that took place between 2009 and 2014
was based on the invoice from the foreign supplier to Company A
rather than the actual market value.
Usually, where the goods are imported in fulfilment of a
sales or commission transaction, the import VAT value in
Switzerland is calculated on the remuneration (Swiss VAT Law,
Article 54, paragraph 1(b)).
In this case, however, Company A failed to prove a direct
supply from its foreign vendor and thus performed the import in
its own name and not part of a sales or commission
In the court decision, the organising of the transport to
Switzerland and the transition of economic disposal, provided
the predominant arguments to the Federal Administrative Court.
The decision also included parts of the criminal investigation
team's report containing several interviews with those
responsible for logistics and tax at Company A and Company
The SFCA decided that the correct market price is the sales
price from A to C minus 10%. This deductive method is also
mentioned in the guidelines, VAT information 06, of the Swiss
Federal Tax Authorities. This interpretation has now been
affirmed by the Federal Administrative Court.
The Federal Administrative Court deliberately left open the
question as to whether the practice of the SFCA creates a
legally non-existing distinction between established and
non-established importers in Switzerland. With regard to the
late payment interest, the court argued that the exemption
according to Article 87, paragraph 2 of the Swiss VAT law did
not apply because the Administrative Court concluded that there
was no proof of an error on the authorities' side. The
Administrative Court disagreed with the argument that the
import customs office failed to challenge the declared import
VAT value while challenging other aspects such as the HS Tariff
number and preferential proof of origin in previous
The company has appealed against the decision to the Swiss
Federal Court. In the meantime, companies with similar supply
chains should assess the potential impacts of the decision.
Benno Suter (firstname.lastname@example.org) and
Hevin Demir (email@example.com)
Tel: +41 58 279 6366 and +41 58 279 6902