Input tax refund procedure in Switzerland

PROCEDURES AND DEADLINES IN SWITZERLAND

Companies domiciled abroad that incur expenses in Switzerland for their business activities can reclaim the VAT paid on these expenses as input tax. This is the case if the following conditions in particular are met cumulatively:

• The company has its registered office abroad and can present a corresponding confirmation of entrepreneurial status from the relevant country,
• the company is not entered in the Swiss VAT register,
• the company does not provide any taxable services in Switzerland (services provided on behalf of a third party in Switzerland and charged on in its own name are also deemed to be services provided by the applicant),
• the costs were incurred in connection with output services of the company that would be taxable in Switzerland,
• the country in which the company is domiciled grants Switzerland reciprocal rights,
• the input tax to be refunded is at least CHF 500 per calendar year and
• the VAT to be reimbursed was rightly charged by the service provider.

THE FOLLOWING IS A SUMMARY OF THE MOST IMPORTANT POINTS REGARDING THE CLAIM FOR A TAX REFUND

The entitlement to a tax refund is maintained if the applicant only provides services in Switzerland for which he is exempt from tax liability and does not waive this liability.

The entitlement to a tax refund also remains in force if the applicant distributes or has distributed free brochures or promotional items for his products in Switzerland or, as a guarantor, carries out warranty work on his products himself or has it carried out by third parties.

However, caution is required with regard to warranty services. Compensation is not possible if the subsequent repair or replacement delivery is (partially) charged on to the end customer by the applicant. In this case, the foreign applicant makes a domestic delivery, which may trigger a tax liability and registration obligation.

There is no entitlement to a tax refund on invoices for advance payments and payments on account. This requires a definitive final invoice after receipt of the service.

Example:

Sport AG, based in Germany, will be exhibiting at the Zug Trade Fair in Switzerland in June 2025. The trade fair organizer issued an advance payment invoice to Sport AG in November 2024. As the Zug trade fair will not take place until June 2025, the service has not yet been received in November. Only after the trade fair has been held can the taxes paid on the invoice on account be claimed in the 2025 remuneration period (to be submitted in the following year 2026) when the final invoice is submitted.

A representative resident in Switzerland must be appointed to submit the application. The application must be submitted using the official FTA form (no. 1222 and 1223) and must be accompanied by the original receipts. The application must be submitted between January 1 and June 30 of the following year in which the costs were incurred. If this deadline is missed, the input tax can no longer be claimed.

CHECKLIST FOR INPUT TAX REFUND PROCEDURE SWITZERLAND

• The person responsible in the company should check by the beginning of June whether an input tax credit of at least CHF 500 was accumulated in Switzerland in the previous year.
• If an application appears to be worthwhile, all invoices from Switzerland charged with VAT should be collected in the original. Be careful with electronically transmitted invoices. A printout is generally not considered an original.
• The application must be accompanied by an entrepreneur certificate or similar proof.
• The FTA checks refund applications very closely! If it is foreseeable that higher input tax is to be expected in Switzerland, employees should be made aware of this in advance and invoices should be checked critically for formal correctness when they are posted. Invoice corrections are often time-consuming, and the deadlines for the refund procedure are absolute! A "Fact Sheet" with the most important information provides help.

CONCLUSION

Refund procedures are always quite formalistic and involve a certain amount of effort. In an EU comparison, however, Switzerland still performs relatively well in terms of the effort required to obtain a refund of VAT paid in Switzerland as a foreign company. Even for comparatively small sums, it is worthwhile entering the refund procedure.