Questions & answers VAT

Tax liability of companies based abroad

• Importation of goods

  Question:
  A company based abroad sends machines to Switzerland. On these the import tax (VAT) is raised at the customs. The recipients of the machines are exclusively Swiss companies. Does the company based abroad have to register for VAT in Switzerland if the turnover in the year 2018 amounts to CHF 2 000 000? 

  Answer:
  No, the place of supply of goods is deemed to be abroad, i. e. outside the scope of Swiss VAT.

• Architectural office

  Question:
  An architectural office domiciled abroad provides planning services for the construction of a residential property in Switzerland. The remuneration for this service is invoiced to the building contractor domiciled in Switzerland. Has the architectural office to register for VAT in Switzerland? 

  Answer:
  Yes, the architectural office domiciled abroad has generally to register for VAT in Switzerland. The architectural office is exempt from tax liability as long as it generates in Switzerland and abroad within one year a turnover of less than CHF 100 000 from supplies, which are not exempt from tax according to art. 21 VAT Act.

• Selling of ebooks online

  Questions:

  • A company based abroad sells electronic books and magazines online. The worldwide turnover amounts to USD 8 million, of which USD 20 000 are invoiced to non-taxable customers in Switzerland.
     
  • A company based abroad sells electronic books and magazines online. The worldwide turnover amounts to USD 50 000, of which USD 10 000 are invoiced to non-taxable customers in Switzerland.
     
  • A company based abroad sells electronic books and magazines online. According to the budget the worldwide turnover of the year 2018 will amount to USD 8 million, of which USD 20 000 will be invoiced to taxable customers in Switzerland.

  Has the company based abroad to register for VAT in Switzerland, if it provides exclusively the listed services in Switzerland? 

  Answers:

  • Yes, the company based abroad, which supplies electronic services to non-taxable recipients domiciled in Switzerland, has to register for VAT in Switzerland (art. 10 para. 2 letter b item 2 revised VAT Act). Electronic newspapers, magazines and books without advertising character are taxable at the reduced rate according to art. 25 para. 2 letter abis revised VAT Act.
     
  • No, the company based abroad, which supplies those electronic services to non-taxable recipients, is exempt from tax liability because the turnover limit per year is not reached (art. 10 para. 2 letter a revised VAT Act). The acquisition tax is not due, since the electronic services are supplied to non-taxable recipients (art. 45 para. 1 letter a revised VAT Act).
     
  • No, the company based abroad, which supplies those electronic services to non-taxable recipients is exempt from tax liability (art. 10 para. 2 letter b item 2 revised VAT Act). The taxable recipients have to pay the acquisition tax for the purchased services at the reduced rate (art. 45 para. 1 letter a revised VAT Act).

• Training courses

  Question:
  A company based abroad conducts training courses in Switzerland, which meet the conditions for an educational service exempt from the tax. The worldwide turnover amounts to EUR 3 000 000, of which EUR 500 000 were generated with the training courses in Switzerland. Has the company based abroad to register for VAT in Switzerland? 

  Answer:
  No, the company is not liable to tax in Switzerland, because services, which are exempt from the tax according to art. 21 VAT Act (and where the option for their taxation according to art. 22 VAT Act has not been exercised), are not to be included in the turnover relevant regarding the tax liability.

Deduction of fictional input tax

• Export of items

  Question:
  The taxable person deducted the fictional input tax when purchasing a bicycle from a non-taxable private individual. The concerning bicycle is then delivered to a customer abroad. Does the taxable person have to revise the deducted fictional input tax? 

  Answer:
  No, the sale of the bicycle to a customer abroad is exempt from the tax according to art. 23 para. 2 item 1 VAT Act and does not result in a revision of the deducted fictional input tax.

• Operating supplies

  Question:
  The taxable person purchases a table from a non-taxable private person for their conference room. Is it allowed to deduct the fictional input tax?  

  Answer:
  Yes, even items, which are not intended for resale, entitle the taxable purchaser to deduct the fictional input tax as long as the item is procured in the course of a business activity entitling him to make an input tax deduction.

• Sale of damaged items by a insurance company

  Question:
  The taxable insurance company pays the insured private individual a compensation of CHF 15 000 for the takeover of an accident vehicle, taking into account the value of the damaged vehicle in the amount of CHF 10 000. The insurance company then sells the vehicle to a private individual. Can the insurance company deduct the fictional input tax? 

  Answer:
  Yes, the insurance company is entitled to deduct the fictional input tax based on the amount of CHF 10 000. The sale of the vehicle to a private person is subject to VAT at the standard rate.

Margin taxation

• Selling of a sculpture at a sacrifice

  Question:
  The taxable art gallery purchases a sculpture for CHF 8000 from a private person. This sculpture is later sold for CHF 5000. Can the margin taxation be applied to this losing bargain? 

  Answer:
  Yes, the margin taxation is applicable. The turnover of CHF 5000 has to be declared in no. 200 of the accounting form. The purchase price of CHF 8000 is deducted from the taxable turnover through declaration in no. 280.

• Selling of a painting, which is not intended for resale

  Question:
  The taxable restaurant purchases form a non-taxable artist a painting for CHF 7000. The painting is hung up in the dining room of the restaurant. Although the painting was not intended for resale, the restaurant sells the painting for CHF 13 000 to a private person a year later. Can the margin taxation be applied? 

  Answer:
  Yes, the margin taxation is applicable. The turnover of CHF 13 000 has to be declared in no. 200 of the accounting form. The purchase price of CHF 7000 is deducted from the taxable turnover through declaration in no. 280. The margin of CHF 6000 is subject to VAT at the standard rate. No VAT details must be included on a sales receipt or invoice.

Tax liability of public authorities

• Tax liability of public authorities

  Question:
  The communal agency «Werkhof» (maintenance area) invoices CHF 300 000 to an independent public authority and CHF 50 000 to another independent third party for its services in connection with snow clearing. Is the communal agency «Werkhof» obligatory liable to tax? 

  Answer:
  No, the communal agency «Werkhof» is exempt from tax liability because the limit of CHF 100 000 turnover per year from taxable supplies to persons other than public authorities is not reached. The taxable person of a public authority is exempt from tax liability as long as not more than CHF 100 000 turnover per year derive from taxable supplies to persons other than public authorities.

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