As per January 1, 2019, the regulations regarding mail order shipments in the Swiss Value Added Tax (VAT) Act are being revised. The intention of this revision is to place foreign suppliers on an equal footing with domestic suppliers. The current unequal treatment arises from the fact that no VAT is levied on imports of goods (import tax) if the tax amount is CHF 5 or less (so-called small consignments). In addition, the delivery of goods is also not subject to domestic VAT (domestic tax). Small consignments from abroad can thus be obtained without having to pay any VAT, whereas the same consignments are subject to domestic tax if purchased from a domestic supplier subject to Swiss VAT.
New legal situation from January 1, 2019
If a foreign mail order company generates at least CHF 100,000 turnover per year from small consignments to Switzerland, its deliveries will be deemed to be domestic supplies. As a result, it will be subject to tax in Switzerland and must register for Swiss VAT purposes. Tax liability triggers when the turnover limit of CHF 100,000 is reached.
As of the entry of the foreign mail order company in the Swiss VAT register, not only the small consignments of the mail order company will be considered as domestic supplies, but also all other consignments (i.e., where the import tax amount is more than CHF 5). As a result, all shipments of such mail order companies to Switzerland will be subject to domestic tax.
If, on the other hand, a foreign company is entered in the Swiss VAT register due to other supplies provided in Switzerland, and if this company also ships small consignments from abroad to Switzerland, these small consignments continue to be considered foreign turnover. Deliveries from small consignments will thus not become domestic supplies until the turnover of CHF 100,000 per year from such deliveries to Switzerland is reached.
Review of VAT liability and registration
Anyone who achieves a turnover of at least CHF 100,000 in 2018 from small consignments will be liable to tax from January 1, 2019 and must be entered in the Swiss VAT register if it is to be assumed that such deliveries will also be carried out in 2019.
If a mail-order company starts shipping small consignments to Switzerland after January 1, 2019, its shipping and transport deliveries will be deemed provided in Switzerland and it will become subject to Swiss VAT as soon as the turnover of CHF 100,000 from small consignments per year is reached. It must then be entered in the VAT register.
Companies or persons who meet the requirements for tax liability must register for Swiss VAT purposes with the Swiss Federal Tax Administration (FTA). The foreign company or person must appoint a tax representative resident or domiciled in Switzerland. In addition, a security must be provided by means of cash or a bank guarantee from a bank domiciled in Switzerland.
Practical note: The FTA provides a list of mail order companies entered in the Swiss VAT register. This list enables companies entrusted with customs clearance to clarify whether import tax is to be charged to the recipient of a parcel or to the taxable mail order company