Blockchain-based applications are becoming increasingly popular. At the same time, there is still uncer-tainty about the VAT treatment of relevant technology-specific transactions, such as the validation or verifi-cation activities of so-called validators. In a recent ruling, the Federal Administrative Court (FAC) takes a position on this for the first time.

The legal dispute to be decided by the FAC concerned validation and verification activities in the blockchain networks Polkadot (with the native token "DOT") and Kusama (with the native token "KSM"). The taxpayer performed validation and verification activities in the aforementioned block-chain networks, which are based on the proof-of-stake concept, using software and hardware as a so-called "validator". For its activities as a validator, the taxpayer received so-called block rewards newly created by the protocol as well as a share of the transaction fees spent by the senders.

A VAT audit by the Federal Tax Administration (FTA) resulted in a claim for additional taxes in connec-tion with these activities.

Die ESTV begründete die Steueraufrechnungen damit, dass die Validierungs- resp. Verifizierungstätigkeiten der Steuerpflichtigen zusammen eine steuerbare elektronische Dienstleistung nach dem Empfängerortsprinzip darstellten, wenn die Steuerpflichtige neben dem Block-Reward auch eine Transaktionsgebühr erhält, welche vom Versender resp. von den Versendern mit Sitz im Inland für eine bestimmte Transaktion über das Netzwerk bezahlt wird. Diesfalls bestünde ein steuerbares Leistungsverhältnis zwischen dem Versender als Leistungsempfänger und der Steuerpflichtigen als Leistungserbringerin, welches der Inlandsteuer zum Normalsatz unterliege. Das Entgelt für die Validierungs- resp. Verifizierungstätigkeiten bemesse sich am Block-Reward und der Transaktionsgebühr.

Considerations of the FAC

The FAC's reasoning for the ruling expresses itself on some fundamental questions.

Network and sender as separate recipients of the services of the validators

The FAC first addresses the question of the recipient of the services provided by the validators.

It states that validators in the blockchain network at issue here, on the one hand, provide services for which the network itself is to be regarded as the service recipient. This is justified, among other things, by the fact that the validators can (at least theoretically) also create blocks that do not contain any transactions. For the creation of such empty blocks, the validators also received the correspond-ing reward offered by the network (E

On the other hand, according to the court, the activities of the validators directly benefited the send-ers and they were therefore to be regarded as recipients of services. The court thus contradicts the opinion of the FTA, according to which only the senders are to be considered as service recipients.

Decentralised networks not recipients of supplies within the meaning of VAT

The court then addresses the question of whether a network company behind the network is the actual recipient of the supplies to the network.

Bei den beiden hier betroffenen Netzwerken handelt es sich nach Ansicht des BVG um «echte» dezentrale Netzwerke, in denen die Protokollgesellschaft keine alleinige Verfügungsmacht habe. An der alleinigen Verfügungsmacht fehle es, soweit alle Änderungen am Protokoll per Stake-gewichteter Abstimmung unter den Netzwerkteilnehmern beschlossen werden und die jeweilige Protokollgesellschaft selbst nicht über genügend Token verfüge, um Protokoll-Änderungen gegen den Willen der übrigen Netzwerkteilnehmer durchsetzen zu können (E Es sei unstrittig, dass bei Leistungen, die ausschliesslich an ein dezentrales Blockchain-Netzwerk als solches erbracht werden, mangels zuordenbarem Leistungsempfänger keine Leistungen im mehrwertsteuerrechtlichen Sinn gegeben sein können (E 3.2). Diese Tätigkeiten fielen demnach nicht in den Anwendungsbereich der Schweizer Mehrwertsteuer.

Thus, only the transaction processing was to be assigned to the sender of a transaction as the ser-vice recipient (E

Transaction processing = taxable service subject to the place-of-receipt principle

In the court's view, this transaction processing constituted a fundamentally taxable service subject to the place-of-recipient principle, for which the validator received the transaction fee (E 3.5.3). However, this did not change the qualification of the block rewards (allocated by the protocol) as non-remuneration (E 3.4.4).


The ruling brings clarity regarding the basic VAT treatment of certain activities of validators.

Im Detail unerörtert (da nicht streitgegenständlich) bleiben aber beispielsweise Fragen im Zusammenhang mit der Bemessungsgrundlage in Bezug auf die Transaktionsgebühren für die Leistungen der Validatoren.

It should also be noted that the ruling, by its very nature, dealt with a specific set of facts in a specif-ic environment. As two applications are rarely identical in the blockchain world, it is imperative to thoroughly analyse the relevant facts and examine where any deviations or parallels to the case de-cided here exist.

Last but not least, it remains to be seen whether the ruling will be appealed to the Federal Supreme Court.

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The Federal Council adopted the dispatch on a partial revision of the VAT Act on 24 September 2021. Parliament adopted the partial revision of the VAT Act on 16 June 2023. From today's perspective, it can be assumed that the amendments will enter into force on 1 January 2025.

The planned changes affect the following areas in particular (non-exhaustive list):

  1. Electronic platforms ("platform taxation")
  2. Travel agency services
  3. Subsidies
  4. Trading in emission and comparable rights
  5. Administrative measures (reporting period, fiscal representation)
  6. Applicability of the reduced tax rate and tax exemptions

Below we briefly summarise essential aspects of the planned changes. We would be happy to discuss with you in detail how the changes affect you in your specific individual case.

  1. Electronic platforms ("platform taxation")
  2. In future, the electronic platform itself will be regarded as the person making the supply that the seller and buyer conclude through it: A chain transaction is therefore deemed to exist between the seller, the electronic platform and the customer.

    Services do not fall within the scope of the new regulation on platform taxation.

    If the goods supplied in Switzerland come from abroad, the supply is deemed to be made by the platform in Switzerland if it makes at least CHF 100,000 per year from the supply of small con-signments exempt from import tax (Art. 7 para. 3 let. b VAT Act; so-called "mail-order regula-tion"). In this case, the foreign platform becomes liable to pay tax in Switzerland.

    If the electronic platform fails to comply with its VAT obligations in Switzerland, the FTA may order administrative measures against it, ranging up to import bans and the destruction of goods without compensation. The names of the electronic platforms against which such measures have been determined are made public by the FTA.

    The application of platform taxation is linked to a number of preconditions which make it neces-sary to examine the specific transactions in the individual case and to subsume them under the new regulation.

  3. Travel agency services
  4. In future, all services provided by travel agencies in their own name will be considered as ser-vices taxable at the provider location. A distinction between accommodation, catering or transport services provided by the travel agency in its own name, which are taxable at the place where the service is actually provided, is therefore no longer necessary.

    The services of travel agencies are exempt from tax (i.e. in principle entitle the taxpayer to de-duct input tax) if they are actually performed abroad or if it is a service that would be exempt from tax under Article 23 para. 2 VAT Act if it were not performed by a travel agency. This now also includes the travel agency's own services, such as tour guides.

    As a result of the new regulation, foreign travel agencies or tour operators will no longer be lia-ble for tax in Switzerland if they organise trips to Switzerland. In return, they cannot reclaim input tax on services purchased in Switzerland. Domestic travel agencies and tour operators, on the other hand, must pay full tax on such domestic trips.

  5. Subsidies
  6. A legal fiction is now included in the law, according to which funds paid out by a community are considered a subsidy or contribution under public law for VAT purposes, provided that the com-munity expressly designates these funds as a subsidy or contribution under public law to the person receiving them.

    Subsidies are considered non-considerations that are not subject to VAT but require a reduction of the input tax deduction at the level of the subsidy recipient, Art. 18 para. 2 let. a in conjunction with Art. 33 VAT Act.

  7. Trading in emission and comparable rights
  8. The transfer of emission rights, certificates and attestations for emission reductions, guarantees of origin for electricity and similar rights, certificates and attestations will now be subject to ac-quisition VAT (“Bezugsteuer”) regardless of whether the supplying party is registered for VAT in Switzerland or not, Art. 45 para. 1 let. e of the Draft VAT Act.

    At present, it is still unclear whether the VAT Ordinance will create the precondition for the appli-cation of the notification procedure (“Meldeverfahren”) for the settlement of corresponding commercial transactions on a transitional basis until the partially revised VAT Act comes into force.

  9. Administrative measures (reporting period, fiscal representation)
  10. Taxable persons with a turnover of no more than CHF 5,005,000 per year from taxable services will in future be given the option of settling their VAT annually upon request. The application of annual accounting does not change the accounting method. In the case of annual reporting, ac-counting is therefore still carried out either effectively or - if a corresponding authorisation is available - with flat-rate tax rates (“Saldo-“ or “Pauschalsteuersätze”).

    Pursuant to Art. 86a of the Draft VAT Act, a provisional tax payment is made during the annual reporting period by means of instalments that are determined by the FTA and invoiced quarterly or semi-annually (depending on the accounting method). The tax claim of the last tax period is decisive for the determination of the instalments. If it is not yet known, it is estimated by the FTA. In the case of newly taxable persons, the tax claim expected by the end of the first tax pe-riod is decisive.

    In future, the FTA may refrain from requiring foreign companies to designate a domestic fiscal representative, provided that the fulfilment of the procedural obligations by the taxable person and the swift enforcement of this law are guaranteed in another way, Art. 67 of the Draft VAT Act.

    The practical significance of this amendment to the law remains to be seen, as the service abroad of documents with more than purely informative content can be very sensitive from a legal point of view and may even be relevant under criminal law. Therefore, in fact, it can only be done through diplomatic channels (which are not practicable in mass proceedings) or where this is regulated accordingly in bilateral treaties.

  11. Applicability of the reduced tax rate and tax exemptions
  12. In future, the reduced tax rate will apply to menstrual hygiene products.

    The following are now exempt from VAT:

    • Travel services resold through travel agencies and related services
    • Active participation in cultural events
    • Coordinated care benefits for curative treatments
    • Provision of infrastructure to attending physicians in outpatient clinics and day clinics
    • Care and domestic services of private Spitex
    • Offer and manage investment groups of investment foundations in accordance with BVG


    The partial revision is accompanied by partly far-reaching changes. Depending on the respective industry, this may make it advisable for taxpayers to fundamentally consider their current setup. In any case, it is important for taxpayers to understand at an early stage what effects the partial revision has or may have for them. We are happy to support our clients in identifying risks and structuring options and in planning in the best possible way for the company.

When selling a property that is demolished following a change of ownership, there is a risk that the tax authority will only consider the value of the land based on the last relevant change of ownership or assessment as investment costs when determining the taxable profit from real estate.


The tax on profit from sale of real estate is intended to tax the so-called "unearned appreciation of value" on the sale of a property. This presupposes that, in terms of scope and content, the same property is sold as was acquired at the time. So-called comparable circumstances must be established by taking into account the changes in substance that occurred during the period of ownership or since the previous sale when determining the profit. The value of the property in question may have increased (increase in substance) or decreased (decrease in substance) as a result of actual or legal changes.

A decrease in substance can occur either through legal or actual deterioration, a reduction in the substance of the property or its area. However, the cause of an actual decrease in substance may not only be that a building built on the property was destroyed or neglected, but may also result from the fact that the building is no longer worth preserving for economic reasons, e.g. because the property is structurally underutilised and the existing building is therefore not prof-itable despite its good condition. If such a property is demolished by the new owner immediately after the sale, from the point of view of the tax administration it is effectively undeveloped land that is being sold. In application of the principle of congruence, the purchase price must there-fore be reduced by the value of the building at the time in order to determine the tax on profit from the sale of real estate, i.e. only those property values that are to be compensated with the proceeds (purchase price) are to be considered as investment costs when determining the profit.

The decisive factor in determining whether such demolished buildings are taken into account in the investment costs is whether these buildings were included in the pricing. As a rule, the pub-licly certified contract of sale is used as evidence. There is a presumption that the purchase price includes the value of the property with all its components if the sale contract does not con-tain any indications for or against the inclusion of the building in the pricing. However, this can be disproved, for example on the basis of indications that the purchaser intended the demolition (with subsequent new construction) from the outset and that it is therefore not to be assumed according to life experience that the purchaser would have been willing to pay for this object as well. The fact that the seller was aware of the fact that the purchaser intended to demolish the property immediately after the purchase and replace it with a completely new building can also speak against the inclusion of the building in the purchase price.


It is advisable to ensure that all real estate assets are considered when determining the purchas-ing price of a property which is demolished following the change of ownership. The real estate assets should be listed accordingly in the contract of sale in order to avoid a high financial bur-den due to the tax on profit from real estate.

In barter transactions, payment is made not with money, but by rendering a counter-supply resp. by offsetting against a counterclaim. In practice, such barter-like transactions are a common means of compensating for mutual supplies without a cash flow. But be careful, even if no mon-ey flows, VAT is still due and must be duly accounted for.

In principle, supplies provided by taxable persons in Switzerland for consideration are subject to Swiss value added tax (VAT) unless these supplies are exempted from tax or zero rated.

Consideration is the asset value that the supply recipient spends to receive a supply. If the supply recipient settles the provider's claim other than through monetary payment (e.g. by providing a supply himself), the consideration is measured according to the amount that is thereby settled. This means that both contracting partners have to post in their accounting the full value of their own supply (as an expense) and the full value of the supply received in return (as income). Both contracting partners pay tax on the total value of the supply rendered by the other contracting partner at the applicable tax rate. This is the case, for example, if an IT company is contracted to set up the IT infrastructure at an accountancy service provider and in return the accountancy firm prepares the accounting for this IT company (further explanations of this example below in the text).

Special features of clearing transactions


In barter transactions, both contracting parties are at the same time the provider and the recipient of the supply. Insofar as tax liability exists, each must pay tax in full on the supply rendered to him (as remuneration for his own supply).

The special feature of clearing transactions is also that the consideration of the buyer takes place other than through monetary payment (e.g. provision of a counter-performance, so-called perfor-mance in lieu of payment). If the service and the consideration are of the same (market) value, this means that no money flows between the two parties. If the value of the service and the consideration differs, then a cash flow takes place despite offsetting, but to a reduced extent (payment of the dif-ference).

In the case of exchange relationships, the market value (e.g. list price) of each service shall be deemed to be the remuneration for the other service. If, for example, the market value of the IT com-pany's services equals CHF 10,000 (excl. VAT), this value is deemed to be the remuneration for the service provided by the accountancy firm to the IT company. The accountancy firm must pay tax on this remuneration as turnover. The Swiss Federal Tax Administration (FTA) does not provide any spe-cific information on the market price, which is why determining the correct market price often proves difficult in practice.

In accordance with the principle of gross invoicing, offsetting in which only the difference is booked is not permitted for VAT purposes (violation of the ban on offsetting). The mere booking of the dif-ference between the mutually provided services is also not permitted if the contracting party is not a taxable person. This also applies if there are no detailed records of the supplies to be offset, i.e. if only the amount to be paid has been invoiced or no invoice has been issued at all.

According to the practice of the FTA, the correct tax treatment of supply offsetting can best be achieved if separate receipts are created for the service and the remuneration (e.g. mutual invoicing). However, this is not a mandatory requirement but also makes sense for accounting reasons (no post-ing without a receipt).


In the following, the offsetting from the VAT perspective is clarified using two examples.


Example 1: Barter transaction between two taxable persons

IT company A provides various IT services to accounting firm B. In return, accounting firm B prepares the accounts for IT company A. Both contracting parties have their registered office in Switzerland, are registered in the Swiss VAT register and invoice according to the effective accounting method. Both parties provide taxable services which are taxable at the standard rate of 7.7%. The value of the mutually provided services including VAT was set in the contract as follows:

IT services to accounting firm B CHF 10 770 (incl. 7.7% VAT)

Accounting services to IT company A CHF 10 770.- (incl. 7.7% VAT)

There is no cash flow between the two parties, as the service and the consideration are of equal val-ue. They both have to book CHF 10,000 as revenue and declare it in the VAT statement as turnover under item 200. At the same time, both parties record the identical amount as an expense for the re-ceipt of the consideration.

Provided that both IT Company A and accounting firm B are entitled to full input tax recovery, both can deduct the invoiced VAT of CHF 770 in full in item 400 of their VAT statement.

Accounting at IT Company A:

1. Provision of IT services to accounting firm B



Receivables from supplies


CHF 10 770.00


/ Service revenue

CHF 10 000.00


/ VAT liabilities

CHF 770.00

2. procurement of accounting services from accounting firm B




/ Liabilities from supplies

CHF 10 770.00

Cost of services


CHF 10 000.00

Receivables VAT


CHF 770.00

3. offsetting VAT



Liabilities from supplies

/ Receivables from L&L

CHF 10 000.00

VAT liabilities

/ Receivables VAT

CHF 770.00

Tax liability/credit


CHF 0.00

In this example, there is a zero-sum game for both contracting parties, since services of the same value and at the same tax rate are mutually offset. For this reason, tax liability and tax credit balance each other out. However, this can also lead to a different result under different conditions, as the next example shows.

Example 2: Barter transaction with only one taxable person

Influencer A asks Hotel B if he can stay there for two nights free of charge. According to the hotel's booking site, the price for the two nights is CHF 1,000 including 3.7% VAT. In return, the influencer offers to advertise for Hotel B on his online channels. Both parties are domiciled in Switzerland. Since Influencer A achieves a worldwide turnover of CHF 80,000 per year, he is exempt from tax liability. Hotel B, on the other hand, is registered as a taxable person in the Swiss VAT register.

Hotel B has to pay tax on the market value of the influencer's service as remuneration for its own service. Since the parties have agreed that the mutually provided services should "cancel each other out" (and no additional payment flow is required), they have obviously assumed that the service and the consideration are equivalent in the result. The hotel has to pay tax on the two overnight stays at the applicable tax rate. The special rate of 3.7% applies to accommodation services.

Hotel B therefore books CHF 964.30 as income and declares this as turnover in point 200 of the VAT statement. This results in a tax debt of CHF 35.70, which Hotel B must pay to the FTA.

In return, Hotel B records the advertising service received from Influencer A to the value of CHF 1,000 as an expense. As Influencer A is not registered for VAT, this payment does not include VAT and therefore does not entitle the person to an input tax deduction.


Booking at Hotel B:


1. provision of accommodation services to Influencer A



Receivables from supplies


CHF 1 000.00


Accommodation income

CHF 964.30


/ VAT liabilities

CHF 35.70

2. purchase of web services from Influencer A



Cost of services

/ Liabilities from supplies

CHF 1 000.00

Receivables VAT


CHF 0.00

3. offsetting



Liabilities from supplies

/ Receivables from L&L

CHF 1 000.00

VAT liabilities

/ Bank (transfer to FTA)

CHF 35.70

Tax liability


CHF 35.70

In this example, too, there is no cash flow between the parties, as the receivables and liabilities (coun-terclaim) balance each other out in the result.


Caution is advised in the case of barter transactions. Both parties must account for the VAT on their full performance (offsetting prohibition). It is advisable to clarify the respective starting position (ap-plicable tax rate, accounting method, etc.) of both parties in detail in order to be able to correctly assess the VAT consequences of the exchange transaction. Certain case constellations can certainly lead to the VAT having a negative impact on the margin of the contracting parties.


Autor, CV in short form (continuous text up to max. 200 characters incl. blank lines)

At the end of 2022, the Swiss people approved an increase in VAT rates as of 1 January 2024.

Consequently, the following VAT rates will apply from 1 January:


So far


Standard rate

7,7 %

8,1 %

Reduced tax rate

2,5 %

2,6 %

Special rate for accommodation services

3,7 %

3,8 %

As usual, delimitation issues arise in the case of tax rate increases to a certain point in time (e.g. in the case of several partial services, periodic services or in the case of a discrepancy between the time of conclusion of the contract and the time of supply beyond the validity periods of the respective old or new tax rates). This article is intended to shed light on some essential aspects that taxpayers should consider before 1 January 2024 against the background of the upcoming tax rate change.

Relevant event for the determination of the tax rate

In principle, only the time of supply or (e.g. in the case of permanent services) the period of supply is decisive for the applicable tax rate. This is all the more relevant because in Switzerland the accrual of the tax is in principle independent of the time of performance of the service. Rather, the tax accrual depends on the date of invoicing or the date of receipt of the payment. The date of invoicing or payment, on the other hand, is not relevant for determining the applicable tax rate.

Partial payments or partial invoices

In the case of partial payments or partial invoices, the services provided up to 31 December 2023 must be invoiced at the previous tax rates, while those provided from 1 January 2024 must be invoiced and settled with the FTA at the new tax rates.

Periodic benefits

In the case of periodic services, e.g. magazine subscriptions, the period of service provision is decisive.

In connection with periodic services that are partly provided after the tax rate increase (e.g. magazine subscriptions, SaaS for consumers), an apportionment of the consideration pro rata temporis is to be made. If the service provider cannot know at the time of sale until 31 December 2023 when exactly the service will be provided (a typical example would be the multi-ride ticket for ski lifts with immediate validity), the time of sale is exceptionally decisive for the applicable tax rate.

Advance payments

With regard to advance payments for future services, it should be noted that the portion attributable to the period from 1 January 2024 must already be invoiced and settled at the new tax rate if it is already known at the time of the advance payment that the service will be provided in whole or in part after 31 December 2023.

Reverse Charge

As far as the Reverse Charge is concerned, here too only the time or period of the provision of the purchased service is decisive.

Ancillary services

According to the generally applicable rules, ancillary services are treated the same as main services for tax purposes and share their VAT fate. For example, if a car showroom sells and delivers a passenger car including free service for the first two years on 12 December 2023, the purchase price will be invoiced at the current tax rate of 7.7%. The free service for 2 years included in the sales price is treated as an ancillary service and is therefore also subject to the tax rate of 7.7%.

Turnover corrections

Adjustments of the consideration received are to be adjusted at the tax rates applicable at the time (or period) of supply.


From an administrative point of view, for services that are subject to both the previous and the new tax rates due to the period of their provision and are listed on the same invoice, the date or period of the provision of the service and the respective amount share attributable to it must be shown separately. If this is not possible, all services invoiced must be invoiced at the new, higher rates.

Ultimately, the principle of "tax invoiced is tax owed" also applies in connection with the tax rate change, i.e. the tax shown in the invoice is the tax to be settled with the FTA, even if it is excessive. This is the case if an invoice shows the new tax rates with respect to services provided before 1 January 2024. A subsequent correction of the tax can only be made if a correction of the invoice is made in accordance with Art. 27 para. 2 let. a VAT Act or the service provider can credibly demonstrate that the Swiss State has not incurred any loss of tax as a result.

The new tax rates can be declared in the VAT statement forms for the first time from 1 July 2023.


Further peculiarities and special cases must be taken into account in particular for rental, leasing and commission contracts as well as in connection with the input tax deduction. Taxpayers who account according to the flat-rate tax method also have to consider adjustments in the applicable tax rates.

Here, as well as in certain sectors with complex service relationships (e.g. the energy or construction sector), it is advisable to check the concrete effects on one's own business as early as possible and to implement appropriate measures. Tax rate changes are by no means unusual in Switzerland and the recent past shows that the correct handling of critical issues has been the focus of e.g. VAT audits by the FTA.


An important date for the upcoming tax rate change is 1 July 2023, as from this date it will be possible to settle accounts with the new, increased tax rates. In general, it is important to ensure that the auto-mated booking systems are adapted in good time.

Experience with tax rate changes in the past shows that constellations regularly arise in practice that require a case-by-case consideration and cannot be answered without further ado. In such cases, it is advisable to consult an expert and clarify the questions directly with the FTA, if needed.