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Switzerland Introduces Landmark VAT Changes

by Ulrika Lomas, Tax-News.com, Brussels

01 January 2018


Switzerland introduced numerous significant changes to its value-added tax rules on January 1, including measures aimed at leveling the playing field for domestic businesses in competition with overseas, online retailers.

Under the changes, a company's global turnover will now be taken into account when calculating its liability to VAT. Companies with a global turnover of at least CHF100,000 will be liable to VAT from the first franc of turnover in Switzerland.

Before the change, a foreign company providing services in Switzerland did not have to pay VAT on Swiss turnover up to a CHF100,000 (USD103,726) threshold. This led to competitive disadvantages for Swiss businesses, especially in the border regions.

The change will be introduced a year later for mail-order businesses, to allow Swiss Post more time to implement the necessary systems. From 2019, mail-order companies will be liable to VAT if their annual turnover from import-tax-free small consignments is at least CHF100,000. These companies will be required to bill customers for VAT and customers will no longer have to pay the taxes and fees levied by Customs upon importation.

On January 1, 2018, Switzerland also introduced a reduced rate of VAT for electronic newspapers, magazines, and books, and margin taxation for collectors' items. It also cut the headline rate to 7.7 percent.

TAGS: compliance | VAT rates | VAT special schemes | tax | business | value added tax (VAT) | fees | Switzerland | retail | services | VAT goods & services classification | VAT compliance matters

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