Switzerland imposes new VAT registration requirements on foreign companies

Tue 22nd Apr 2014

The Swiss Federal Council has published plans this week to require non-resident companies providing services in Switzerland to collect and charge Swiss VAT at 8%.

Unfair non-resident VAT competition

Whilst Switzerland closely follows the European Union VAT Directive in its own VAT regime, there are important differences. There is limited use of the VAT reverse charge mechanism for goods or services being imported. This means non-resident companies may have to register for Swiss VAT and collect the tax from its Swiss customers.

The Council wants to see improved enforcement of this requirement to provide Swiss service providers with a more realistic price comparison.

The Department of Finance will now require many foreign companies who are only providing services in Switzerland on a one-off or temporary basis to VAT register. There will be a threshold of CHF100,000 on global income to prevent some companies being burdened with admin requirements. It is estimated that this will generate CHF 10m per annum.

Otherwise, the Swiss VAT registration threshold for non-resident companies is CHF100,000 of Swiss income per annum.