Tax representation in Switzerland
This comprehensive guide to fiscal representation in Switzerland explains everything you need to know about your tax obligations in Switzerland. Find out about VAT regulations in Switzerland, how to open a customs account or what your delivery options are in Switzerland.
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All about tax representation in Switzerland
Are you planning to sell your products and services in Switzerland? In this case, the fiscal representation in Switzerland is a crucial subject for your activities and your customers. Indeed, in order to remain competitive and trade in Switzerland without encountering problems, your company must appoint a person domiciled in Switzerland as a fiscal representative for VAT purposes, in accordance with the federal law.
Switzerland is one of the preferred export territories for French companies. The export volume for 2019 is 17 billion euros. To benefit from this fast growing market, you need to opt for a fiscal representation in Switzerland.
Are you developing your export sales? Do you have new VAT obligations in Switzerland to manage? We have the solution to help you develop your business without adding to the paperwork.
Tax representative in Switzerland: definition.
To understand the function of a fiscal representative, it is essential to look at his field of activity. In the case of the tax representative in Switzerland, his main responsibility includes
- The assessment of the tax liability,
- The registration of the company for VAT in Switzerland,
- The intermediary function between the French company and the Swiss tax authorities,
- The settlement of the annual turnover,
- Correspondence on site for clients and authorities of the Federal State,
- Declaring VAT on behalf of your company.
In short, federal tax representatives play a key role in the tax management of French companies wishing to do business in Switzerland. Their responsibilities cover a variety of tasks ranging from tax assessment to VAT settlement, and their on-site presence allows for effective communication with Swiss tax authorities and clients.
When to contact a tax representative in Switzerland?
Foreign companies will have to be identified for VAT purposes in Switzerland to declare their taxable operations there as soon as their global turnover exceeds CHF 100,000 (approximately €93,000). As of January 1, 2018, companies will have to identify themselves for VAT purposes in Switzerland for their taxable operations, if they have a global turnover of at least CHF 100,000 in Switzerland and abroad.
The following activities are subject to VAT liability:
- E-commerce sales
- Services in the field of telecommunications and the electronic supply of information to end consumers domiciled in Switzerland
- Provision of services on site (catering/hotel)
- Services related to a building located in Switzerland (renovation, architect, interior designer, etc.)
- Organization of an event in Switzerland
- Transport of passengers
- Sales of goods from Switzerland (including delivery of goods with assembly)
- Repair of movable goods located in Switzerland
- Rental of movable goods in Switzerland.
What is the cost of a fiscal representative in Switzerland?
According to experience, the cost of a fiscal representation for VAT in Switzerland for a small company is generally between 800 and 1000 euros per quarter. However, it is important to note that costs may vary depending on the size of the company and the services required, as there is no uniform pricing. Most of the costs associated with a fiscal representation are related to the preparation and transmission of the VAT statement.
If you are interested in a tax representation for your company, we can provide you with an accurate cost estimate quickly and free of charge, without obligation. Our sales managers will be happy to answer any questions you may have about the rates and services available.
All about Swiss VAT
Now that we have defined what a tax representative is and in which situations it is necessary to hire one, let’s turn to his main field of intervention: VAT. Indeed, the value added tax (VAT) in Switzerland is equivalent to the one in France.
How to register for VAT in Switzerland?
If you want to issue invoices with Swiss VAT, you must first register for VAT. Your tax representative in Switzerland can help you with this registration procedure.
Once the registration is completed, the tax authorities will provide you with your VAT number in writing. The company identification number consists of the letters “CHE” and a nine digit number. Thus, a Swiss VAT number looks like this CHE-xxx.xxx.xxx. Please note that the Swiss company identification number is different from the EU VAT identification number, also known as IDE.
The registration of your company will be notified to the Federal Statistical Office by the tax authorities. Your company will then be published in the IDE register, a centralized database used for the identification of companies. Public data about the company will be limited to the minimum necessary for unique identification, such as name and address, as well as VAT registration information if it has been done.
Registration of your company with the tax authorities requires a deposit of a financial guarantee in cash or in the form of a bond. The amount of the financial guarantee corresponds to 3% of your annual taxable turnover in Switzerland, with a minimum of 2000 francs (about 1860 euros) and a maximum of 250 000 francs (about 232 307 euros).
What are the VAT rates in Switzerland?
In Switzerland, most services are subject to VAT at the standard rate. However, some services related to basic human needs are subject to a reduced VAT rate, such as food products, books and medicines.
- The standard VAT rate: 7.7%
- Intermediate rate: 3.7%
- The reduced VAT rate: 2.5%.
From January 1st 2024, the Swiss VAT rates will be as follows:
- The standard VAT rate will increase from 7.7% (2023) to 8.1% (2024)
- The reduced rate will increase from 2.5% (2023) to 2.6% (2024)
- The intermediate rate will increase from 3.7% (2023) to 3.8% (2024)
The VAT declaration in Switzerland
After obtaining your Swiss VAT number, your company must pay VAT every quarter. The VAT declaration must be made electronically on the portal of the Federal Tax Administration.
To simplify the administration, only income generated in Switzerland must be declared. However, you will have to convert the amount of sales made in euros into Swiss francs (CHF). The conversion is generally based on the exchange rate published by the Federal Tax Administration.
It is possible to deduct import taxes as input taxes from the VAT statement, provided that the imports were made in the name of your company or e-commerce.
Territoriality of VAT in Switzerland
It should be remembered that for VAT purposes, the Swiss territory includes not only the national territory, but also the Principality of Liechtenstein and the German municipality of Büsingen, among others. Companies making deliveries to Liechtenstein and Büsingen are subject to the same regulations as those applicable to deliveries to Switzerland. It is therefore important to understand the tax and customs requirements for these destinations to avoid any risk of non-compliance.
Are you developing your export sales? Do you have new VAT obligations in Switzerland to manage? We have the solution to help you develop your business without adding to the paperwork.
Customs and VAT: creating a customs account
If your company regularly imports to Switzerland, it is important to know that it must open a customs account with the Federal Customs Administration. This condition is also applicable to your e-commerce activity. Indeed, in order to import your products to Switzerland, you must communicate your company’s customs account number to the carrier and the customs agent, so that they can indicate it on the customs declaration.
It is therefore essential to take this administrative formality into account to avoid any delays or problems in the processing of your shipments. By opening a customs account, your company will be able to benefit from certain facilities such as payment delays or simplified customs procedures.
Territoriality of VAT in Switzerland
Opening a customs account has many advantages for companies importing regularly to Switzerland. First of all, it reduces waiting times at the customs office, as shipments are released as soon as the application is accepted, unless the customs administration decides to examine the goods.
In addition, payment of customs duties and import taxes can be done without cash. The invoice for customs duties and import taxes is sent separately, by e-mail. In addition, the payment terms for import taxes are automatically extended. The payment period for import tax is now 60 days, with an additional five days for customs duties.
Without a customs account, import taxes must be paid immediately upon crossing the border, which can lead to delays and complications. It is therefore worthwhile for companies that regularly import to Switzerland to open a customs account to facilitate and accelerate customs procedures.
In summary, opening a customs account offers many advantages to companies importing into Switzerland, including reduced waiting times, electronic payment of taxes, extended payment terms and simplified customs procedures. This allows companies to import with peace of mind and strengthen their business relationship with Switzerland.
How to open a customs account in Switzerland?
To benefit from the advantages offered by a customs account, it is necessary to provide a financial guarantee which is calculated according to a key defined by the Federal Customs Administration. This guarantee can be in the form of a bond or in cash. The customs administration regularly checks the amount of the guarantee and can request an increase in writing if necessary.
In addition, a separate customs account is required for procedural VAT obligations. It offers direct access to the original tax rulings for import VAT, which are now only issued electronically by the Federal Customs Administration. These rulings are the ideal proof for the right to deduct import VAT as input tax in periodic VAT returns. Only a business with its own customs account can control access to the original import taxes.
Delivery of goods in Switzerland
Incoterms (International Commercial Terms) are standardized terms defining the rights and obligations of buyers and sellers in international trade transactions. Each Incoterm describes the responsibilities of each party regarding the costs, risks and logistics of delivering the goods.
Among the various delivery methods, DDP (Delivered Duty Paid) differs from the others in that it requires the seller to bear all costs and risks associated with delivery to the final destination of the goods, including customs duties and VAT. Thus, the seller assumes greater responsibility and offers a turnkey solution to the buyer.
When it comes to VAT for export to Switzerland, it is essential to understand the tax and customs obligations in force to avoid any risk of non-compliance. The choice of delivery method can also have a significant impact on customers, as it can result in additional costs such as customs duties and VAT, which may be collected at the time of delivery.
Therefore, it is important to choose the most VAT-efficient delivery method to minimize costs for the business and provide an optimal customer experience. Opting for DDP delivery can be a cost-effective solution for companies that regularly export to Switzerland, as it ensures a turnkey delivery with no unexpected costs for the buyer.
Delivery from France to customers in Switzerland: attention to Incoterms
The fiscal representative in Switzerland allows you to optimize your customer delivery process. Subscribing to a fiscal representation mandate allows you to sell your products under DDP. Why sell to a customer with the DDP Incoterm ?
Selling in Switzerland with the DDP Incoterm
Let’s take an example together:
When a customer places an order on your website, he sees the price of the product with the Swiss VAT, as well as the transport and customs clearance costs. For him, there is no “border barrier”.
If you take care of all the costs of delivery to the buyer’s door, this is called a DDP (Delivered Duty Paid) delivery in international trade terminology. DDP deliveries are the norm in international e-commerce with B2C customers. DDP sales therefore encourage the customer’s buying action, as there are no additional costs to pay.
It is important to understand that the choice of delivery method can make a significant difference for your customers in terms of VAT.
Selling in Switzerland with the DDP Incoterm
When you ship goods to Switzerland without the DDP Incoterm, your customer is considered the importer and is generally responsible for paying customs duties, import taxes and other taxes. Your customer will receive, in addition to his package, an invoice for customs duties and import VAT to be paid directly to the delivery person. This can be an unpleasant surprise.
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