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Switzerland Changes VAT Rules

Written by: Bridgewest

Switzerland-Changes-VAT-RulesAt the end of 2014 Switzerland decided to make some changes in its taxation system. Therefore, the beginning of 2015 will bring two major changes to the appliance of the country VAT once a new Value-Added Tax Ordinance will be issued. One of these changes targets foreign companies that will be allowed to register for taxation in Switzerland, while the second refers to group taxation.

Registration for taxation of foreign companies in Switzerland

The first change in the Swiss Value Added Tax Act refers to foreign companies being allowed to register and account for their supplies made in Switzerland. In order to qualify for VAT registration in Switzerland foreign companies must have a turnover exceeding 100,000 CHF. The change was mainly developed for companies involved in the construction industry in order to reduce the difference between foreign and local construction enterprises. The rule will apply until it is added to the Value Added Tax Act. If the appliance of the rule will prove to be successful, the Swiss government intends to further apply it to other business sectors.

The beginning of 2015 brings good news for companies in the telecommunication field and broadcasting companies in EU and non-EU member states. From a VAT point of view both types of services suppliers will be equally treated. Therefore, companies in EU countries providing telecommunication services to Swiss consumers may move their companies in Switzerland as they will no longer be disadvantaged from a VAT point of view. However, for a better understating of all changes brought to the Value Added Tax Ordinance it would be best to consult a Swiss law firm.

New regulation for tax groups in Switzerland

The second change in the Value Added Tax Ordinance is the deletion of the 3rd paragraph in Article 13 that referred to the exclusion of group taxation for occupational benefit schemes. This change was enabled because the 3rd paragraph in the Article was inconsistent with the law on occupational benefits that stated group members would be jointly and severally liable for paying the value added tax. The Swiss Federal Supreme Court had previously established the exclusion of VAT groups was unlawful. By deleting this paragraph, occupational benefits schemes will now be included in group taxation and thus complying with Swiss laws.

As the new regulations will enter into effect, we will keep our readers up to date with the ulterior developments.