Update on the partial revision of the VAT Act from 01 January 2025

The partially revised VAT Act has been in force since 1 January 2025. This article provides information on the current status as at mid-January 2025.

 

1. ELECTRONIC PLATFORMS ("PLATFORM TAXATION")

A so-called "supply chain fiction" (see illustration below) simulates a supply from the trader to the platform and from the platform to the customer for VAT purposes, see Art. 20a new VAT Act. The platform must therefore account to the FTA for VAT on sales to customers, provided that these are subject to domestic tax. Please note: The so-called mail order regulation for the delivery of low-value consignments of goods from abroad continues to apply, Art. 7 para. 3 let. b VAT Act. In fact, the new regulation should lead to a comprehensive tax liability for foreign trading platforms in Switzerland. However, domestic private sellers who occasionally sell goods via a trading platform, for example, are also affected: The trading platform will undoubtedly pass on the VAT it owes to the sellers.

In practice, numerous questions arise in connection with platform taxation. It is therefore all the more regrettable that at the time of writing this article, the FTA has not yet published any guidance on administrative practice.


2. SERVICES PROVIDED BY TRAVEL AGENCIES 

Whereas today, in the case of travel abroad, the individual components of the trip must be broken down for VAT purposes and assessed individually according to their service content, in future the so-called place of supply principle will apply to all travel agency services, i.e. the travel agency's services (own and those charged on from third parties) will be deemed to have been uniformly provided at the registered office of the travel agency. Travel agency services are exempt from tax if they are provided abroad or if they would be exempt from tax on the basis of Article 23 of the VAT Act if they were provided by a person who is not a travel agency.

At the time of writing this article, the FTA has not yet published any information on administrative practice.

3. SUBSIDIES

If a public authority expressly designates the funds it provides to the recipient as a subsidy or other contribution under public law, these funds are deemed to be a subsidy or other contribution under public law, Art. 18 para. 3 new VAT Act. Subsidies are deemed to be non-consideration 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. Until the end of the finalisation period, the municipality has the option of designating funds to the recipient as a subsidy or other contribution under public law. Taxpayers who do not agree with the qualification as a subsidy will have to actively defend themselves against this.

VAT Info 05 "Subsidies and donations" has been revised accordingly, whereby the amendments are currently limited to editorial additions to the new provisions without providing further practical information.

4. TRADING IN EMISSION AND COMPARABLE RIGHTS

The transfer of emission rights, certificates and attestations for emission reductions, etc. (separate from the supply of energy) are now generally subject to acquisition tax - regardless of the domicile of the seller. A letter (e) has been added to Art. 45 para. 1 VAT Act. The provision does not apply if the traded rights etc. fall under the tax exemption pursuant to Art. 21 para. 2 no. 19 let. e VAT Act. In particular, trading in derivatives on such rights, certificates and attestations is exempt from the tax.

Incorrectly invoiced domestic VAT is only deductible as input VAT if the recipient of the service can prove that the service provider has also invoiced and paid this domestic VAT.

Section 2.5 of VAT Info 14 "Supply tax" contains a list of the rights, certificates and attestations that fall within the scope of the amendment. These include in particular

  • emission allowances in accordance with Article 2 letter c of the CO2 Act;
  • national certificates in accordance with Article 2(d) of the CO2 Act;
  • emission reduction certificates in accordance with Article 2 letter e of the CO2 Act;
  • international certificates in accordance with Article 2(f) of the CO2 Act;
  • Guarantees of origin for electricity in accordance with Article 9 EnG;
  • other certificates for the origin of energy (e.g. guarantees of origin for renewable fuels and combustibles [so-called eTS/eBS system]);
  • foreign rights, certificates and attestations that correspond to the above-mentioned rights, certificates and attestations (e.g. European emission allowances or guarantees of origin for foreign electricity);
  • domestic or foreign rights, certificates and allowances transferred in the voluntary market for greenhouse gas offsetting that correspond to the aforementioned rights, certificates and allowances (e.g. voluntary emission reductions [VER])

5. ADMINISTRATIVE MEASURES

Accounting period

In future, taxable persons whose annual turnover from taxable supplies does not exceed CHF 5,005,000 will have the option of settling VAT annually. The application of this method has no influence on the invoicing method. Authorisation for annual invoicing is granted on request and can be refused or revoked if the taxable person does not meet their invoicing and payment obligations or does so insufficiently, Art. 35 and 35a new VAT Act.

Taxpayers must make advance payments on their tax liability during the year (quarterly or half-yearly for taxpayers with a net tax rate). The instalments are determined and invoiced by the FTA, Art. 86 new VAT Act. The tax claim for the last tax period is decisive for determining the instalments. If it is not yet known, it will be estimated by the FTA. In the case of new taxpayers, the tax claim expected by the end of the first tax period is decisive. If the taxable person considers the instalments to be too high or too low, they can apply to the FTA for an adjustment of the instalments.

At the time of writing this article, the FTA has not yet published any information on administrative practice.

Fiscal representation

Taxable persons without a place of residence or business in Switzerland generally require a tax representative in Switzerland ("fiscal representative"). Administrative simplifications and cost savings are to be created here by dispensing with the requirement for a tax representative under certain conditions. The FTA may waive the requirement to appoint a representative in accordance with paragraph 1 if the fulfilment of procedural obligations by the taxable person and the swift implementation of this Act are guaranteed in another way, see Art. 67 para. 1 bis new VAT Act.

There is no indication in the law, ordinance or the corresponding messages as to how "the fulfilment of procedural obligations by the taxable person and the rapid implementation of this law can be ensured in other ways". In this respect, it remains to be seen whether the administration will comment in more detail. At the time of writing this article, the FTA has not yet published any information on administrative practice.

CONCLUSION

Even after the entry into force of the partially revised VAT Act, questions regarding its implementation by taxable persons remain unanswered. We are monitoring the development of administrative practice and will keep you informed of any developments here.