25 years after the introduction of VAT in Switzerland, we reflect on how the Swiss VAT landscape would look like if Switzerland were part of the EU. GDPR also addresses the export of personal data outside the EU.

In contrast, some other forms of taxation, such as income and corporate taxes, impede economic activity and can distort decisions between consumption and investment. View an alternate. DTTL and each of its member firms are legally separate and independent entities. This prevents automated programs from posting comments. Suite 950 For Switzerland, the higher EU VAT rate would imply price increases in almost all daily goods and services and some businesses would be affected as well. Switzerland. Every company must hold a number like this in order for accurate taxation. Supplies of goods to/from Switzerland from/to another EU Member State would not qualify as imports/exports but intra-EU acquisitions/supplies, which are subject to strict rules (notably the VAT exemption for intra-EU supplies) and reporting obligations, VAT rates would be significantly higher. For Switzerland, the higher EU VAT rate would imply price increases in almost all daily goods and services and some businesses would be affected as well. Reverse charge applies to the majority of cross border services. Here is a flavour of how it would have slightly redefined our Swiss VAT landscape: Although similar, there are differences between both VAT systems. The information we collect, and process is required for us to be able to perform our contractual obligations and receive payment from you for the accountancy and related services we provide to you. This category only includes cookies that ensures basic functionalities and security features of the website. However, it also discriminates against larger businesses, creating economic distortions. Stay up on the tax news and analysis that matters to you. recapitulative statements for intra-EU transactions, intrastat returns, etc. Reduced rates, to a minimum of at least 5%, can be applied in the EU on specific goods or services listed in Annex III to the VAT directive, and there are a number of exceptions subject to conditions. Email address will not be displayed with the comment.). Washington, DC 20005, Tax Expenditures, Credits, and Deductions, Small Business, Pass-throughs, and Non-profits, Sources of Government Revenue in the OECD, Opportunities for Pro-Growth Tax Reform in Austria, Tax Proposals, Comparisons, and the Economy, http://www.oecd.org/tax/tax-policy/tax-database.htm#VATTables, European Central Bank’s (ECB) 2018 exchange rates. We work hard to make our analysis as useful as possible. Swiss companies would have more VAT reporting obligations than just periodic VAT returns; e.g. Use and enjoyment rules do not apply in Switzerland. The VAT is a consumption tax assessed on the value added to goods and services. We also use third-party cookies that help us analyze and understand how you use this website. You can follow this conversation by subscribing to the comment feed for this post. Apart from VAT rates and thresholds, the VAT base also significantly impacts the effectiveness and efficiency of a VAT. Our work depends on support from members of the public like you. However, Switzerland underwent several VAT revisions to harmonise its legislation with the EU rules and others are expected in the near future (e.g. Switzerland is not a member of the European Union and trades in the Swiss Franc. In this regard, Switzerland is one step ahead of the EU, which has just confirmed the application of different VAT rates depending on the format in the ECJ's decision of March 5 2015. For over 80 years, our goal has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. The General Data Protection Regulation (GDPR) is a regulation in European Union (EU) law on data protection and privacy for all individuals within the EU and comes into effect on 25th May 2018. Your comment could not be posted. 1325 G St NW Yes, recovery of input tax is not permitted if it relates to private use or non-business. This means that a business’s revenue of taxable goods and services must be above a certain value before it is required to register and pay a VAT on its products. The format for a VAT identification number is: 123456 or CHE 123 456 789 MWST.

He specialises in advisory on complex international supply chain projects (structuring and optimization), VAT reviews, due-diligences, assistance with VAT audits and report and compliance. While VAT-registered businesses can deduct all the tax already paid in the preceding production stages, the end consumer does not receive a credit for the VAT paid, making it a tax on final consumption. The potential for easy administration, significant tax revenue, and few economic distortions make the VAT one of the most efficient forms of taxation. The countries with the highest VAT rates are Hungary (27 percent), and Sweden, Norway, and Denmark (all at 25 percent).

As a final step before posting your comment, enter the letters and numbers you see in the image below. VAT returns must be submitted quarterly and annual returns are not required. According to EU law, EU Member States are required to levy a standard VAT rate of at least 15 percent and a reduced rate of at least 5 percent. https://www.vatexpertsineurope.com/data-protection-policy/, The right to correct any incorrect information, The right to specifically opt-in to any future communications, The right to move data to another organisation. The end consumer does not, making it a tax on final consumption. VAT Returns – Switzerland. This is only a preview. Read more. The Tax Foundation is the nation’s leading independent tax policy nonprofit. In the EU Switzerland would have been part of the European single market and would have had to comply with Directive 2006/112/EC (VAT Directive). Most European countries set thresholds for their VATs. What would have been the VAT impact of being part of the EU? Registration thresholds identified in this table are general concessions that relieve domestic suppliers from the requirement to register for and/or to collect VAT until such time as they exceed the revenue threshold.

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The cornerstone of EU-Swiss relations is the Free Trade Agreement of 1972. Having trouble reading this image? We will not share your information with any 3rd parties. DTTL and Deloitte NWE LLP do not provide services to clients.

We'll assume you're ok with this, but you can opt-out if you wish. In Spain and Turkey, all businesses, regardless of their revenue, are required to register and pay a VAT. The thresholds of non-euro countries have been converted into euros for comparability by using the European Central Bank’s (ECB) 2018 exchange rates.

With an average VAT rate of 20%, the VAT cost would be CHF 200k The standard rate of VAT is 8%, and reduced rates of 2.5% and 3.8% are available.

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Some businesses would benefit from specific EU VAT rules; e.g., the “single entity principle” whereby a Swiss head office would not have to self-assess Swiss VAT on charges by its foreign branches, financial services to recipients outside the EU would open the right to recover input VAT, etc. A Value-Added Tax (VAT) is a consumption tax assessed on the value added in each production stage of a good or service. Prior to joining Deloitte, he worked for a major industrial company as VAT and GL accountant and gained 3 years of experience in the start-up environment. You also have the option to opt-out of these cookies. VAT Number Format : 123.456.789.MWst. The period of VAT recovery by tax authorities has a timescale of 5 years. Necessary cookies are absolutely essential for the website to function properly. As today’s tax map shows, although harmonized to some extent by the European Union (EU), Europe’s VAT rates vary moderately across countries. VAT deductions and refunds also have a period of 5 years. This website uses cookies to improve your experience.

Please see About Deloitte to learn more about our global network of member firms. Source: OECD (http://www.oecd.org/tax/tax-policy/tax-database.htm#VATTables). Any company established outside of Switzerland must appoint a tax representative to register for VAT in the country. There are no applicable Intrastat thresholds in Switzerland. VAT rates in Switzerland. Your comment has not yet been posted. With an average VAT rate of 20%, the VAT cost would be CHF 200k. According to EU law, EU Member States are required to levy a standard VAT rate of at least 15 percent and a reduced rate of at least 5 percent. Terms of Use | Privacy. However, the country has adopted some aspects of EU law and participates in the EU’s single market. VAT Name: VAT/MWst/IVA/TVA. We may share your personal data with another party, including a payroll firm in connection with your business and your instructions to us.