Marking 25 years of the Swiss VAT system
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Marking 25 years of the Swiss VAT system

Sponsored by

The rule applies in Poland irrespective of the governing law

Constant Dimitriou and Katharina Blattner of Deloitte Switzerland explain how 25 years later, the Swiss VAT system continues to evolve.

Switzerland introduced its VAT system 25 years ago in 1995. However, since adoption, the system has undergone extensive renewals throughout the years.

Existing businesses are shifting towards electronic services and an increasing number of businesses are entering the digital market. This, combined with the fact that foreign businesses have the obligation to register for Swiss VAT from the first service provided to a non-VAT registered person in Switzerland (business-to-consumer, B2C), explains how there has been a rapid increase of the number of electronic service providers that are registered for VAT purposes in Switzerland.

Assessing the changes and clarifications

As a result of this development, novel challenges have arisen from a Swiss VAT perspective. A few examples of the technical questions that the Swiss Federal Tax Administration (FTA) has tackled over the past months include the following examples.

Qualification of the supply

For example, the sale of physical books will be qualified as a supply of goods from a VAT perspective. However, what happens when books become e-books? 

In 2018, the FTA confirmed that the sale of e-books will be considered as e-services. The qualification may, however, be more difficult in practice such as online learning and distance courses. The question whether these qualify as VAT exempt educational services or taxable e-services depends on how the programme is delivered, the level of human interaction, the technology used, and whether exercises are corrected by the teacher, among other considerations. 

The FTA published a draft in mid-2019 to introduce a detailed definition of e-services, which aims to clarify the practice, and establish legal certainty on this aspect. The definition is based on three cumulative conditions for services to be qualified as electronic:

  • The service must be provided through the internet or another electronic network;

  • The provision of the service must be automated and there must be minimal human intervention of the supplier; and

  • The service could not be provided without information technologies.

Place of supply, VAT registration and attraction principle

As opposed to the supplies of goods, the supplies of services follow a different type of supplies rules. E-services are taxable as per the general rule, i.e. at the place of the beneficiary (Article 8, paragraph 1 of the VAT Law), which triggers a VAT registration as from the first B2C supply. This provided that the supplier has a worldwide annual turnover exceeding CHF 100,000 ($106,500). Once the VAT is registered, the provider has to charge Swiss VAT on all e-services including on business-to-business (B2B).

VAT rate

The nature of the supply also defines the VAT rate applicable. Provisions were thus introduced on January 1 2018 in the Swiss VAT Ordinance regarding the applicability of the reduced VAT rate to e-books without advertising purpose (subject to conditions).

Looking forward

Businesses entering in the digital market in Switzerland should be aware of the various VAT questions surrounding the provision of e-services and take the appropriate actions.

Constant Dimitriou


Katharina Blattner


more across site & bottom lb ros

More from across our site

One partner believes pillar two legislation will come, while another tells ITR it depends on the country’s future political makeup
Proposals by HM Revenue and Customs to raise standards in the advisory market are ‘well overdue’, one partner declared
An intimate understanding of a client’s sector is essential to winning new business, a survey of over 28,000 corporate counsel reveals
‘Auditors are failing to perform their core function’ according to a think tank; in other news, White & Case adds a tax partner in Luxembourg
An overhaul of EU import taxes could spell the end of an exemption for cheap parcels
Sharma, managing director for A&M in the United Arab Emirates, tells ITR about intense time pressures, mimicking Jurgen Klopp and what makes tax cool
AI will speed up some of the most laborious TP processes without making human input redundant, argues Hank Moonen, CEO of TaxModel
Firms with a broad geographic reach are more likely to win work, especially from global companies with high turnovers, according to survey data of nearly 29,000 corporate counsel
Australian businessman Gordon Merchant used EY’s advice to offset an A$85 million capital gain, according to the Federal Court
Griggs has been drafted in ahead of schedule as the incumbent Tim Ryan departs for Citigroup; while the Netherlands plans to scrap a 15% share buyback tax
Gift this article