Swiss non-resident traders registration requirements

Tue 10th Feb 2015

From 1 January 2015, Switzerland has changed the rules on non-resident companies providing services to local companies. This includes loss of the use of the reverse charge mechanism above the VAT registration threshold of CHF 100,000 per annum. The measure has been introduced to prevent VAT avoidance.

Swiss VAT reverse charge

The new rules apply to construction-related services such as installation, construction or renovations. From 1 Jan 2015, foreign companies will have register as a foreign VAT entrepreneur, and charge Swiss VAT at 8%. Previously, they had passed the reporting of VAT to the Swiss customer who would report the input and output VAT in their VAT return. These two entries would cancel each other out, and therefore there was no cash effect.

However, where the customer was actually a private individual, there have been many instances of non-declaration of the VAT. This would mean foreign suppliers were effectively 8% cheaper than Swiss providers.