The Swiss Federal Tax Administration (FTA) announced that from 15 November 2018, mail-order businesses registering online for VAT purposes in Switzerland will have to indicate if they are active in the area of mail-order and give their express consent if they wish to be included on a corresponding list. It is however in their interest to do so in order to ensure that the import VAT is not wrongly invoiced to the client and to avoid potential complaints. On its website, the FTA provides a list of mail-order businesses that are registered for VAT purposes in Switzerland. The aim of such a list is to help the undertakings entrusted with the customs clearance formalities to know whom, between the recipient of the parcel and the mail-order businesses, they should charge the import VAT to. This list can be made available in XML format for the persons responsible for customs clearance formalities.
Under the CHF 100,000 threshold, mail-order businesses may choose to waive the exemption from tax liability and register voluntarily using the declaration of subordination. Under this procedure, a business has authorization from the FTA to import goods in its own name and, if the other conditions are met, can deduct the import tax as input tax in its VAT returns. In terms of VAT, the subsequent supply of goods made to the recipient is then considered made on Swiss territory (same as with the provision for mail-order sales). The main advantage of choosing to apply the declaration of subordination is that a mail-order business can plan ahead its transition towards a mandatory VAT liability as provided in the provision for mail-order sales and its VAT registration.
Background. Article 7(3)b of the Swiss VAT Act, a new provision for mail-order sales, will enter into force on 1 January 2019 (see Switzerland-1145, News 16 August 2018). Accordingly, any person making supplies of low value goods/parcels and achieving in 2018 a minimum turnover of CHF 100,000 from these supplies must register for VAT purposes if it is forecasted that the same supplies of goods will also be provided in 2019. Low value goods/parcels are goods that are exempt from import tax due to the insignificant import tax amount (less than CHF 5.00). If in 2019, a person starts making supplies of goods that are imported from abroad and if those supplies are exempt from import tax due to the insignificant import tax amount, the place of supply for those supplies will be deemed to remain outside the Swiss territory as long as the CHF 100,000 threshold is not reached. From the beginning of the month following the month during which the threshold was reached, the place of supply for all supplies of goods from abroad will change to be on Swiss territory. If this occurs, the mail-order business will have to register for VAT purposes in Switzerland.