August 2018 / Switzerland

August 16 2018

Implementation of mail-order VAT rules finalized

In its meeting of 15 August 2018, the Federal Council finalized the implementation of the previously amended VAT Law with regard to mail-order companies. The Federal Council decided that the implementing regulation concerning the application of the new rules will take effect as from 1 January 2019. Tax Reform in detail: The main changes of the reform, which mostly apply from 1 January 2018, include the following:
  • a reduction of the VAT rates. In this context, it may be noted that the reduced rates apply to electronic newspapers, magazines and books;
  • the fact whether a Swiss company is subject to VAT is determined based on worldwide turnover. All companies that are established in Switzerland or provide services in Switzerland whose combined turnover derived in Switzerland from services which are not VAT exempt is at least CHF 100,000 are mandatorily subject to VAT;
  • companies that import small consignments into Switzerland for an amount of at least CHF 100,000 which are exempt from customs duties (i.e. those duties are not more than CHF 5) are subject to VAT (applicable from 1 January 2019);
  • in their VAT return, taxable persons may opt for a taxable supply without referring to a submitted invoice;
  • a notional VAT deduction is now also allowed for the acquisition of business assets and unused goods;
  • a margin regulation is introduced for works of art, antiques and collectors' items;
  • the VAT due on purchases from a foreign company will only be applied to the purchase of tangible assets; and
  • with regard to the tax liability of government institutions and public bodies, the turnover threshold of CHF 100,000 is decisive.