VAT status of foreign companies in Switzerland

16 Nov 2020

In this article, we analyze the Swiss VAT rules, especially the criteria applicable to foreign companies that provide services on Swiss territory or deliver goods and services to Swiss customers.

Compulsory VAT

Every company that provides services on Swiss territory or has its registered office or a permanent establishment on Swiss territory is subject to Swiss VAT rules.

However, a company can be exempted from compulsory VAT if it meets certain criteria, such as:

  • It generates global sales revenue of less than CHF 100,000 from services that are not exempt from VAT;
  • A foreign company that only provides specific services in Switzerland, namely:
  • VAT-exempt services;
  • Services that are subject to the principle of the place of delivery (for example, consulting services provided from abroad for a Swiss client);
  • Delivery of electricity of gas via a distribution network.

A foreign company that provides services in the field of telecommunications and IT cannot be exempt from compulsory VAT.

Voluntary VAT

Companies that may be exempted from VAT can opt in on a voluntary basis. The scope is then the same as for non-exempt companies and the company is required to submit the relevant statements.

It should be noted that opting into the VAT system on a voluntary basis can be beneficial for a company as it gives it the right to reclaim VAT paid on inputs.

Examples of foreign companies subject to Swiss VAT

Here are some examples of foreign companies that are subject to Swiss VAT on a compulsory basis if their global sales revenue exceeds CHF 100,000:

  • Construction company with delivery and installation operations on Swiss territory. If the place of delivery is on Swiss territory, the company is subject to Swiss VAT.
  • IT company that delivers and installs IT equipment.
  • Tradesperson or entrepreneur who works on Swiss territory.
  • Foreign company that imports goods to Switzerland in its own name and delivers them to a Swiss customer.
  • IT or telecommunications company that provides remote services to persons who are not liable for VAT.

Examples of foreign companies exempt from Swiss VAT

Here are some examples of foreign companies that are exempt from Swiss VAT:

  • A foreign company that sends goods to Switzerland from abroad by post or via a freight carrier. Since the Swiss customer acts as the importer and the goods are not processed in Switzerland, the foreign company does not provide any services on Swiss territory.
  • A foreign company that performs VAT-exempt services on Swiss territory, for example:
    medical care and treatment, education and training services (excluding consulting), cultural services.

Further information

Naturally, we would be happy to provide further information. Please feel free to contact us so that we can analyze your situation.