As of January 1, 2025, Switzerland will introduce significant changes to its VAT (Value Added Tax) regime, targeting electronic platforms involved in the supply of goods. These changes are part of an international trend to modernize tax systems in light of evolving digital commerce, ensuring a fair and efficient tax landscape. Here’s an overview of the key changes and what they mean for businesses.
What Are the New Rules?
The Swiss Tax Administration is introducing a “deemed supplier” rule, where electronic platforms that facilitate the sale of goods will, under certain conditions, be treated as the supplier for VAT purposes. This means platforms will be responsible for collecting and remitting VAT on these transactions, even if they are not the legal owner of the goods.
- The deemed supplier rule applies when electronic platforms enable the sale of goods in Switzerland by third-party sellers, particularly in the following scenarios:
- The goods are imported into Switzerland for delivery to consumers.
- Domestic deliveries involve non-taxable suppliers (e.g., small businesses under the VAT threshold)
- Unlike the EU equivalent, the Swiss rules currently only capture (physical) goods but do not extent to services platforms.
- The new news capture platforms in Switzerland and abroad that sell goods in Switzerland for at least CHF 100’000 per calendar year.
- Platforms deemed suppliers will need to:
- Register for VAT in Switzerland (if not already registered).
- Implement robust systems to track transactions and calculate VAT.
- File VAT returns for the transactions they facilitate.
Why Are These Changes Happening?
The platform economy has grown exponentially, often allowing smaller businesses and individuals to access international markets. However, this growth has posed challenges for traditional VAT systems, which often fail to capture tax revenues from these transactions. Taxing the platform allows to capture those revenues that would otherwise not be subject to VAT.
Implications for Businesses and Platforms
These changes are not just relevant for large e-commerce platforms. Smaller platforms facilitating cross-border or domestic trade may also be impacted. Key considerations include:
- Compliance: Platforms must update their processes, ensuring they can handle VAT obligations efficiently.
- Cost Implications: Additional administrative burdens may require investment in technology and expertise.
- Seller Communication: Platforms will need to clearly inform their sellers about the VAT implications of the new rules.
For businesses using platforms, it’s crucial to understand how these changes might affect their pricing, VAT exposure, and overall competitiveness.
How to Prepare
To navigate these changes, businesses should start planning now. Consider taking the following steps:
- Seek Expert Advice: VAT rules can be complex, especially in cross-border contexts. Consulting with a tax advisor can help clarify obligations and identify strategies to minimize risks.
- Evaluate Your Exposure: Are you operating an electronic platform or using one for your business? Assess your potential VAT obligations.
- Update your Legal Agreements: Make sure that your agreements with suppliers or customers allow to recharge the VAT starting 2025.
- Update Processes: Platforms should implement systems to track seller thresholds, collect VAT, and manage compliance effectively.